Formation damage is a common problem in petroleum reservoirs and happens in different stages of reservoir development from drilling to production. The causes of formation damage include particle invasion, formation fines migration, chemical precipitation, and pore deformation or collapse. Formation damage adversely affects productivity of wells by reducing the permeability of near wellbore region. Furthermore, formation damage also affects well logging results. Therefore, understanding the mechanism of formation damage is vital to predict the extent and severity of formation damage and to control it. This thesis is focused on the study of formation damage caused by external particle invasion. A simplified numerical method based on a commercial code PFC (Particle Flow Code) is proposed to simulate the particle invasion process. The fluid-particle interaction is simplified as hydrodynamic drag forces acted on particles by fluids; the particle-grain interaction is modeled as two rigid balls on contact. Furthermore, an pore network flow model is developed in this study to estimate permeability of damaged formations, which contain two well-separated particle sizes. The effects of the particle size and the initial formation porosity on formation damage are studied in detail. Our study shows that big particles tend to occupy the formation face, while small particles invade deep into the formation. Moreover, particles which are smaller than pore throats (entrances) impair permeability more than those bigger than pore throats. Our study also indicates that a higher initial formation porosity results in more particle invasion and permeability impairment. It is suggested that, in order to reduce formation damage, mud particle size distributions should be carefully selected according to given formation properties. Although our model has some limitations, it may serve as a tool to predict formation damage according to given parameters, and to understand the mechanism of formation damage from a micro-scopic point of view. / text