Abstract: The paper presents a linearization method of governing equations for oil-water flow in porousmedia, discretized to locally perpendicular grids.By using an approximate vector, the same stability is obtained as the semi-implicit solution with IMPESthrough solving the N×N matrices twice. The operationprocedure is presented. The modified IMPES also enjoysmuch higher computation efficiency. The simulation example shows the effectiveness. The method can be generalized for the numerical solution for other typesof non-linear diffusion equations.