A 3D, three-phase (oil/water/gas) permeability modification simulator was developed by incorporating an in-situ gelation model into a black-oil simulator (BOAST). Several important features that describe gel-system transport in a porous medium were considered. Simulation results showed that the effectiveness of a gel treatment in either an injection or production weller in an injection and a production well together decreased as k(V)/k(H) increased. The best gel treatment initiation time in the injection well only or the injection and production wells together was approximately when water breakthrough occurred. The new simulator is useful to simulate and to optimize any combination of primary production, waterflooding, polymer flooding and permeability modification treatments.