It is very important for development of a steam-injection type gas-turbine generator system to elucidate the combustion characteristics and flammability limits under high-steam and low-oxygen atmosphere. In the present study, we carried out a numerical analysis using the detailed elementary reaction mechanism for the counterflow diffusion flame under high-steam and low-oxygen atmosphere, and we clarified the flame structure and the flammability limits and examined the mechanism of flame extinction due to the steam addition. The results obtained are as follows. With the increase in the preheating temperature of fuel and oxidizer, the amount of steam that can be added increases and the flammability range extends. Considering the radiation heat loss, the added steam concentrations at identical flame temperatures and the flame temperatures at identical added steam concentrations decrease by about 10%, but the flame temperatures at the flammability limits are almost the same. The major reason for flame extinction due to steam addition is that the large specific heat of steam decreases the flame temperature, but the chemical kinetics due to steam addition also have a considerable effect. In particular, the flame stability near the extinction limit is influenced by the change of beat release rates of the following elementary reactions: O+CH(3)-> H+CH(2)O (R10), OH+H(2)-> H+H(2)O (R84), H(2)O+O -> OH+OH (-R86), OH+HO(2)-> O(2)+H(2)O (R87) and OH+CH(4)-> CH(3)+H(2)O (R98).