During the development of low permeability reservoirs. the interaction between fluid flow and rock-mass deformation is obvious. On the basis of fluid mechanics in porous media and elasto-plastic theory. the author presents an equivalent continuum model to simulate fluid flow in fractured low-permeability oil reservoir coupled with geo-stress. The model not only reflects the porosity change of matrix, but also the permeability change due to the opening and closing of fracture. By analyzing of simulation results, the changes in porosity and permeability and their effect on oil development are studied.