Abstract: Based on analysis of abundant field data, the authors have built nearly a hundred simulation models and executed the related numerical calculations. The vertical water-oil displacement in the stratified oil-wet sandstone reservo irs has been studied by analyzing the dynamics of gravitational, capillary and driving forces and the effects of main reservoir characteristics, and from the results obtained in this study interpretations of the character and mechanism of water invasion in some reservoirs in China can be made. Simulation studies reveal the fact that there exist wide differences of water-oil displacement mechanism between the oil-wet and the water-wet porous media. The paper points out: 1. As regards the effect of heterogeneity of the reservoir: Quite diffe rent character of water-oil displacement can be found due to different ver tical permeability distribution. In a positive rhythmic reservoir, the greater the vertical permeability difference, the faster the water chanelling, the sma ller the thickness of pay flooded, hence the poorer the result of development; on the other hand, in a negative rhythmic reservoir, large difference of ver tical permeability will, on the contrary, give better result. The oil-wet nature of the formation makes the difference between the two cases even more prominent. 2. In respect to the mechanism of gravitational, capillary and driving forces: The relationship of waterflood performance and scaling factor of the ratio of gravitational and capillary force is found, and then the effect of the permeability and the thickness of reservoir on the water-oil displacement is depicted. 3. Regarding the effect of oil-water viscosity ratio: On water-oil disp lacement it is dealt with both microscopically and macroscopically, e. g. mic roscopically, increase of this ratio leads to a decrease of displacement efficiency and macroscopically, it tends to reduce the sweep thickness. The dominance of one over the other depends on the vertical permeability distributions and other characteristics of the reservoir rock. 4. To increase the production rate within practically possible range in a stratified oil-wet reservoir will essentially have no effect on its recovery factor.