The comprehensive water cut of heavy oil reservoirs with edge water in Gudong Oilfield does not increase but decreases after significant liquid-producing capacity enhancement. With regard to this problem，a study was carried out on the liquid-producing capacity of the middle-high permeability heavy oil reservoirs with the edge water in the late stage of reservoir development. In light of the mechanics of fluid flow through a porous medium，a flow tube method and a material balance method were used to derive the deliverability equation of oil-water two-phase flow in the heavy oil reservoirs with the edge water，and the main factors affecting the development results were analyzed. At the same time，a conceptual model was constructed on the basis of the geological conditions of Kendong Block 18-32，and numerical simulation was employed to study the adaptive conditions and reasonable working system for liquid-producing capacity in the late stage of reservoir development. As a result，a set of evaluation methods suitable for the liquid-producing capacity of heavy oil reservoirs with the edge water were formed. The results demonstrate that reservoir thickness，the distance from the liquid-producing capacity enhancement well to the oil-water boundary，well spacing，and liquid-producing capacity enhancement parameters are the key factors affecting liquid-producing capacity. Field application indicates that the total oil production of 11 wells in the objective block increases by 2.47×104 t；and the average water cut grows by 0.2%；further the output-to-input ratio reaches 3.5∶1.