Abstract: The reservoir stimulation technology of SAGD well squeeze dilatation has been widely applied in Xinjiang Oilfield, and it obviously shortens the preheating period and reduces the economic cost and environmental pressure. At present, however, it is not defined how to evaluate the effect of squeeze dilatation on later circulating preheating and SAGD production. To deal with this situation, the reservoir deformation caused by squeeze dilatation in one certain SAGD well was first calculated by means of finite element method. Then, the SAGD preheating and production based on post-dilatation reservoir model were analyzed using CMG and compared with the situation without dilatation. Finally, the action effects of squeeze dilatation were evaluated. It is indicated that after squeezes dilatation in a reservoir, under the joint effect of enlarging the steam injection space and enhancing the heat convection between injected water and steam, the circulating preheating period is shortened greatly and the ultimate production is increased slightly. The analysis method combining the geomechanical finite element calculation and the numerical reservoir simulation together can provide the engineering guidance for on-site optimal liquid injection.