Unbound granular material specifications for road pavements in Australia are primarily based on physical material specification rather than mechanical characterisation. This simplified approach does not reflect the actual material performance under repeated dynamic traffic loads. There is a little information available on the influence of the local crushed rock properties and compacted layer properties on permanent deformation (PD). This study aims to characterise the local unbound granular materials in Victoria according to their PD behaviour under repeated loads and to develop a suitable shakedown criterion that could describe the PD of the tested materials to simplify the flexible pavement design. Repeated-load triaxial tests were conducted over several samples with a range of moisture contents, gradations, densities, and stress conditions. The laboratory test results showed that PD behaviour was influenced by several factors. In addition, the tested subbase-specified unbound granular materials reflect high PD resistance that is almost equivalent to base-quality unbound granular materials. This may indicate that current requirements for the subbase-quality unbound granular materials are over-prescribe. Moreover, as the existing shakedown criterion was not applicable for the multi-stage repeated-load triaxial test and the local tested materials, a new shakedown criterion and new boundaries are proposed based on the PD behaviour. In the proposed criterion, the shakedown ranges are identified based on the curve angle of the PD vs. logarithm of the number of loading cycles, and this new criterion was validated using several materials from existing literature. The local tested base and subbase materials can be assigned as Range A when PD < 1%, Range B when 1% < PD < 3%, and Range C when PD > 3%. The proposed criterion could provide a useful and quick approach to assess the PD of the unbound granular materials with both single and multi-stages of stresses.