Solvent-based enhanced heavy oil recovery techniques are promising alternatives to thermal-based methods. A better understanding of the solvent-diluted heavy oil gravity drainage is important to practical field-scale applications of the solvent-based heavy oil recovery processes. In particular, the transmissibility, which is defined as the product of the absolute permeability k and pay-zone thickness h of an oil reservoir, is an important parameter to affect the solvent-diluted heavy oil gravity drainage. In this paper, a series of experimental tests were conducted in a visual high-pressure physical model to study the permeability effect. The physical model was packed with the Ottawa sands of different sizes to obtain different absolute permeabilities in the range of k = 7–54 Darcy. The original heavy oil sample collected from the Lloydminster area in Canada was used to saturate the sand-packed physical model and pure propane was used to extract the heavy oil. The drainage height effect was studied by performing the solvent-diluted heavy oil gravity drainage tests in another visual physical model with a different drainage height. The produced heavy oil and solvent were collected and recorded in each test. The produced oil samples obtained at different times were flashed and the flashed-off heavy oil viscosities were measured. It was found that heavy oil was produced much faster in a higher permeability physical model with a larger drainage height. A new correlation was developed to take account of the reservoir permeability and drainage height effects (i.e., the transmissibility effect) on the heavy oil production. In addition, the average produced solvent–oil ratio (SOR) was determined to be in the range of 0.3–0.6 g solvent/g heavy oil. The average SOR was increased as the reservoir permeability and drainage height were decreased. It was also found that the produced heavy oil viscosity was reduced significantly. Furthermore, numerical simulations were undertaken by using CMG STARS module to match the experimental results. This study provides much-needed physical and practical understanding of the solvent-based heavy oil recovery.