Local reinforcement in dowel type timber joints is essential to improve ductility, to increase load carrying capacity and to reduce the risk of brittle failure, especially in the case of using solid dowel. In many types of reinforcing materials available today, DVW (densified veneer wood) has been demonstrated to be the most advantages in terms of compatibility, embedding performance and ductility. Preliminary studies show that using appropriately sized DVW discs bonded into the timber interfaces may be an effective way to reinforce the connection. In this paper, non-linear 3-dimensional finite element models, incorporating orthotropic and non-linear material behaviour, have been developed to simulate structural performance of the timber joints locally reinforced by DVW discs. Different contact algorithms were applied to simulate contact conditions in the joints. The models were validated by the corresponding structural tests. Correlation between the experimental results and the finite element simulations is reasonably good. Using validated finite element models, parametric studies were undertaken to investigate effects of the DVW disc sizes and the end distances on shear stresses and normal stresses in a possible failure plane in the joint.