Fractures are the main flow channels in naturally fractured reservoirs. Therefore the fracture permeability is a critical parameter to production optimization and reservoir management. Fluid pressure reduction caused by production induces an increase in effective stress in naturally fractured reservoirs. The change of effective stress induces fracture deformation and changes fracture aperture and permeability, which in turn influences the production. Coupled interactions exist in the fractured reservoir: (i) fluid pressure change induces matrix deformation and stress change; (ii) matrix deformation induces fluid volume change and fluid pressure change; (iii) fracture deformation induces the change of pore pressure and stress in the whole field (the influence disappears at infinity); (iv) the change of pore pressure and stress at any point has an influence on the fracture and induces fracture deformation. To model accurately the influence of pressure reduction on the fracture permeability change in naturally fractured reservoirs, all of these coupled processes need to be considered. Therefore, in this dissertation a fully coupled approach is developed to model the influence of production on fracture aperture and permeability by combining a finite difference method to solve the fluid flow in fractures, a fully coupled displacement discontinuity method to build the global relation of fracture deformation, and the Barton-Bandis model of fracture deformation to build the local relation of fracture deformation. The fully coupled approach is applied to simulate the fracture permeability change in naturally fracture reservoir under isotropic in situ stress conditions and high anisotropic in situ stress conditions, respectively. Under isotropic stress conditions, the fracture aperture and permeability decrease with pressure reduction caused by production, and the magnitude of the decrease is dependent on the initial effective in situ stress. Under highly anisotropic stress, the fracture permeability can be enhanced by production because of shear dilation. The enhancement of fracture permeability will benefit to the production of oil and gas.