The coefficient of lateral earth pressure at rest K0 is an important state soil variable that is necessary to characterize the in-situ stress state of natural soil deposits. In this study, the values of K0 measured for various granular materials were analyzed and the effect of inter-particle strength on the K0-φ′ correlation was presented. The inter-particle strength was referred to as the surficial frictional resistance mobilized on the contact areas of adjacent soil particles. The measured K0 values indicated that denser and more angular materials tend to produce lower K0 values, likely due to the interlocking effect as postulated by the Jaky's K0 equation. It was also seen that neither the critical-state friction angle nor the peak friction angle for the Jaky's K0 equation produced close match to the measured K0 values. The use of peak friction angle in fact underestimated the values of K0. A new K0 correlation model based on the inter-particle strength analysis was presented. The effect of interlocking on the lateral effective stress was taken into account for the inter-particle strength K0 correlation model. It was shown that the inter-particle strength model well described the dependency of K0, a state variable, on the internal friction angle of soil, a strength parameter.