Abstract: Mud filtrate invasion of formations may lead to changes in resistivity of those formations, so normal resistivity determined from well logging are not true resistivity of the original formation. To determine resistivity of the original formation, mathematic model for radial numerical simulation was constructed in accordance with Darcy’s Law, Mass Conservation Law and State Equation. In addition, well logging and testing data were used to simulate the impact of invading mud filtrate on formation resistivity. By comparing simulation results and results of dynamic simulation of invading mud filtrate, the the newly developed numerical model demonstrated that, with proper setting of relevant parameters, it could be used to determine resistivity of the formation with invasion of mud filtrate. By using the numerical model along with relative permeability test data, well logging and testing data, formation resistivity before and at different times after invasion of mud filtrate can be determined through inversion. Resistivity of Formation H4 encountered by Well XH-1 in the Xihu Sag was determined by using the method. In addition, the initial gas saturation in gas-bearing layers was determined in accordance with the inversion results. The calculated water saturation coincided well with the bound water saturation determined through tests of relative permeability. These results showed that the resistivity before the invasion of mud infiltrate determined through inversion is very close to that in the original formation.