This paper presents a study of the immiscible displacement of oil by water in cavity-fracture structures using smoothed particle hydrodynamics(SPH). The surface tension and wetting behavior are incorporated into the equation of motion, and pseudo periodic boundary conditions are applied. As for "middle-fractured'' structure, it is found that the ultimate oil recovery is almost determined by the height of fracture regardless of its orientation, and the result compares well with corresponding experiments. Besides, the water-wet wall is favorable to higher oil recovery. A systematic exploration is carried out on "upper-fractured'' structure for the feasibility of gravity drainage, where a critical width of fracture is found, beyond which the oil in the cavity can be driven out. The possible development of SPH in this background for large-scale simulation is prospected finally. (C) 2010 Elsevier Ltd. All rights reserved.