In this work, we investigate slip localization in sheared granular faults at seismic velocities using 3-D numerical simulations with the discrete element method (DEM). An aggregate of non-destructive spherical particles is subjected to direct shear by using two moving boundaries in a sandwich configuration to identify the impact of particle-scale parameters on slip localization. We impose a thin layer of fine-grained particles with variable contrast in thickness and grain size adjacent to the boundary as well as in the middle of the granular layer to simulate boundary and Y shears observed in both natural and laboratory fault gouges. The results show that larger amounts of strain is accommodated within the pre-described finer-grained layer even with a small (< 10%) contrast in grain size. Up to 90% of the displacement is localized in a finer-grained layer when the contrast ratio of the grain size is 50%. Based on the concept of the average spreading velocity of particles and squeeze expulsion theory in granular flow, we suggest that the phenomenon of localization is likely from result from the contribution of larger grains collisions with smaller grains. Since the amount of frictional heat generated depends on the degree of localization, the results provide crucial information on the heat generation and associated slip accommodation in sheared gouge zones. We conclude that the occurrence of a weaker, fine-grained layer within a dense fault zone is likely to result in self-enhanced weakening of the fault planes