During waterflooding process, the characteristics of injection water induced fracture propagation and resulting percolated fracture network remain unclear and are of great importance for the optimization of waterflood performance. In this paper, a coupled geomechanics and flow model based on discrete fracture model is developed to model the fracture propagation induced by injected water. A displacement discontinuity method is applied to simulate the stress redistribution and newly formed fractures. The fracture geometry is updated and re-gridding procedures are carried out according to the situation at the certain time step. A validate case and a real field case are studied and results demonstrate the effectivity of the proposed method.