Abstract: During the waterflooding development of an oil reservoir, the variations of its reservoir physical properties and development modes are reflected comprehensively in the production data, so the relative permeability curve based on the dynamic data inversion of oil reservoir is more representative. In this paper, the relative permeability curve was firstly characterized. Then, combined with the reservoir engineering method, the relative permeability curve based on dynamic data inversion was established and applied to real oil reservoirs. Finally, the effect of the relative permeability curve obtained on the basis of core displacement on the distribution of remaining oil was compared with that based on dynamic data inversion by means of the numerical simulation technology. It is indicated compared with the relative permeability curve obtained on the basis of core displacement, the relative permeability curve based on dynamic data inversion is higher and the corresponding residual oil saturation is lower. The relative permeability based on dynamic data inversion can reflect the flowing capacity of oil and water more accurately and its application effect in numerical simulation is better. The research results provide the theoretical support for optimizing the late development of waterflooding oil reservoirs.