In this paper, localized deformation in partially saturated sand was investigated quantitatively using microfocus X-ray computed tomography (CT) and an image analysis of the CT images. Triaxial compression tests on a partially saturated dense Toyoura sand specimen were carried out under a low confining pressure and under drained conditions for both air and water. The development of localized deformation was observed macroscopically using microfocus X-ray CT, and the displacement field over the entire specimen was quantified by an image analysis of the CT images with the digital image correlation (DIC) technique. The progressive development of shear bands is discussed with reference to these images. In addition, the region of localization was observed microscopically by partial CT scanning on a micron scale with high spatial resolution. Changes in the particulate structures are also discussed herein. The DIC image analysis of the partial CT images provided a microscopic displacement field and indicated that very fine localized shear deformation developed before the shear bands had become visible in the macroscopic investigation.