In this study, we conducted numerical simulations of steam injection into a horizontal well. A sandy-shale layer with thickness of I metre is located 2 metre above a horizontal injection well. The numerical simulations intend to study the variations of the stress state and the permeability in the sandy-shale layer during steam injection, and to provide useful effective stress paths for laboratory experiments to follow when testing material properties of the sandy-shale. A self-developed coupled gcomechanics and thermal multi-phase flow simulator was employed to conduct the simulation cases. A strain-induced permeability model was used to describe the anisotropic permeability change of the sandy-shale caused by steam injection. The simulation results demonstrate that the permeability of 5 and 50 md for the sandy-shale in two simulation cases is sufficient to allow pore pressure dissipation to occur, therefore, preventing tensile or shear failure of sandy-shale as a result of high thermal-induced pore pressure. The stress paths within the sandy-shale are approaching the failure envelope as steam injection goes oil indicating simultaneous influence of the temperature and the pore pressure on the stress state change.