The principal aim of reservoir simulation of this study at outcrop is to quantify the impact that lithological heterogeneity on a scale of one to hundreds of meters has on the production of hydrocarbons from incised valley fill reservoirs. Excellent exposure of an incised valley fill unit in the Kaiparowits Plateau region of southern Utah has enabled high-resolution interpretations of the lithofacies distributions to be adapted as two-dimensional flow simulations. The outcrop section through incised valley fill strata is oriented approximately perpendicular to paleoflow and is above the A sandstone sequence boundary within the Cretaceous Straight Cliffs Formation. The lithofacies, identified as shale, heterolithics, and sand bodies with bounding surfaces, give rise to heterogeneity, predominantly in the vertical direction. The direction of least variability is horizontal and parallel to the paleocurrent. Petrophysical properties of the lithofacies have been varied by altering the flow properties, thus generating different scenarios and realizations for comparison. This allows the impact of each rock type on the fluid-flow simulation to be quantified. Our simulation results indicate that for linear drive, where horizontal flow is induced by an injector-producer pair, the distributions of zero- and low-permeability shale and heterolithic bodies only affect flow significantly if sand body properties vary significantly. For vertical flow, however, these lithological units strongly affect the flow because of their effects on flow-path tortuousity. Our simulations show that horizontal well placement, parallel to the paleocurrent (i.e., in the direction of least variability), offers the best sweep efficiency, although the well location must be optimized.