Behavior of granular materials under static and cyclic loading is affected by inherent as well as induced anisotropy. In this paper, the effect of induced anisotropy due to initial static shear stress on quasi-static loading is studied. New dilatancy formulation is developed in a micro-level analysis, which also includes noncoaxiality and fabric anisotropy. The stress, strain and fabric non-coaxialities are attributed to stress-fabric and strain-fabric. The validity of the proposed formulation is examined by simulation of experimental data.