Abstract: In shale gas reservoir with low permeability, gas seepage is influenced by slippage effect. A mathematical model of two-phase (gas-water) shale gas reservoir with consideration of slippage effect and an ideal geological model were established. Numerical simulation was performed for the different parameters of horizontal well fracture impact on production capacity after hydraulic fracturing. The simulation results show that the number, the length and the spacing of fractures are the important parameters for shale gas well production capacity. As the number and the length of fractures increase, the production capacity increases. When determining horizontal section length and the number of fractures, enlarging the space between fractures can reduce the mutual interference. The effect of fracture width and permeability on the production capacity is relatively insignificant.