Abstract: Due to the problems encountered in mid-deep heavy oil reservoirs such as high formation pressure, large heat loss during steam injection, small expansion of steam chamber and poor steam injection effect and so on, nitrogen assisted steam stimulation technology is presented, which is an improved steam stimulation technology. In this paper, experiments and numerical simulations were conducted to research the mechanism of nitrogen assisted steam stimulation and to optimize the injection parameters for the target reservoir in Bohai oilfield. Production mechanisms of nitrogen assisted steam stimulation including viscosity reduction by heating, viscosity reduction by gas solution, gravity displacement, pressurizing, steam chamber expanding, flow behavior changing and water controlling during nitrogen injection into the reservoirs with bottom water are researched, and the key injection parameters such as gas/water ratio, steam injection volume and injection mode are optimized. The numerical simulation results show that when the injection temperature is 350 ℃, the optimum gas/water ratio is 50; the steam injection strength in horizontal wells is 10~15 m3/m for the reservoirs with the thickness of 10 m