The Pai2 reservoir of Chunguang oilfield is characterized by high porosity, high permeability, low formation oil viscosity,large and active edge water, and has the performance of high water-free oil recovery, stable reservoir pressure, rapid rising water cut of edge wells and uneven displacing front. Statistical result of performance data shows that the water advance velocity has a linear relationship with production rate and the producer s production life after water breakthrough is inversely proportional to equal liquid rate. According to the reservoir performance features, an optimization study of reservoir develop method was conducted by numerical simulation. The result show that higher oil production and lower water production can be guaranteed if the well is shut off when its water cut reaches 90%. Keeping the producing pressure drop at 0. 3-0. 4 MPa can maintain a reasonable oil production rate at the premise of high oil recovery. Well arrays located at lower structure of the reservoir should be allocated with lower production rate while those in upper structure with high production rate, which can reduce the edge water fingering and enhance the ultimate recovery.