Steam-assisted gravity drainage (SAGD) is a mature heavy oil thermal recovery technology but inherently limited to low recovery efficiency at mid-late stage due to the increasing heat loss in the steam chamber. Here, the dimethyl ether (DME)-assisted SAGD technology and its relevant transport and interfacial properties are specifically investigated through physical 2D heavy oil simulation. A total of four-set physical experiments, with different DME injection ratios, were conducted and compared with the traditional SAGD. The experimental results indicate DME is capable of reducing the heavy oil’s viscosity and interfacial tension at high temperatures. Three stages, rising, lateral expansion, and descending stages, are determined in the SAGD steam chamber’s development; the mid-late SAGD stage is defined when the steam chamber extends to the caprock boundary. With DME additions at the mid-late SAGD stage, higher oil recovery factor and sweep efficiency could be reached and the dew point temperature of steam chamber’s lead decreases by 0.7–1.8 °C. The optimum gas–water ratio is determined to be 3:1, with the fastest oil recovery growth and the highest final cumulative oil-vapor ratio of 0.163. This study provides reliable experimental bases and valuable analyses for the DME-SAGD technology and its application in heavy oil reservoirs.