Understanding the mechanisms of fiber wrinkling during the compaction process is of paramount importance as fiber wrinkling significantly affects the mechanical properties of composite materials. This study introduces an embedded digital element model for simulating the consolidation process of prepreg. Flexible digital element chains are employed to simulate the reinforcing effect of fibers on resin, accounting for the viscoelastic constitutive behavior of uncured resin. The simulation captures intra-layer wrinkles and in-plane waviness defects in the consolidated prepreg, thereby uncovering the mechanism behind fiber wrinkle formation during composite material prepreg consolidation. The accuracy of the model is validated through compression experiments on flat plates and L-shaped structures. The results demonstrate that the proposed embedded digital element model accurately predicts wrinkle defects. Factors such as interlayer friction of the prepreg, consolidation temperature, and mold curvature radius significantly influence the shape and size of wrinkles.