Recycling crushed construction and demolition waste (CDW) for highway embankment construction is an effective approach to enhancing its resource utilization. This study evaluates the internal stability of compacted CDW particles by seepage erosion tests considering variations in fines content, gradation, and hydraulic gradient. The results demonstrate that internal stability of CDW particles is significantly affected by fines content, gradation, and hydraulic gradient. Properly compacted CDW particles generally exhibit seepage stability. The optimal fines content is around 35%, with gap-graded specimens exhibiting more severe erosion than the continuously well-graded ones. Under cyclic hydraulic gradients, the total fine particle loss and fines content variation in each layer are greater than those observed under constant gradients. This effect is more pronounced in gap-graded specimens. Regression equations were developed to quantify the fine particle loss in CDW particle specimens due to seepage erosion. These equations provided predictions that closely aligned with the experimental findings, offering a reliable tool for assessing the internal stability of CDW particles.