Based on the flow characteristics of fluids in various reservoir media, fractured-vuggy oil reservoirs can be classified into seepage zones and conduit flow zones. An interface exists between these two regions, where the movement of formation fluid near this interface is characterized by a coupling or transitional phenomenon between seepage and conduit flow. However, the complexity of this coupling interface poses challenges for traditional numerical simulations in accurately representing the intricate fluid dynamics within fractured-vuggy oil reservoirs. This limitation impacts the development planning and production adjustment strategies for fractured-vuggy oil reservoirs. Consequently, achieving accurate characterization and numerical simulation of these systems remains a critical challenge that requires urgent attention. A new mathematical model for oil-water two-phase flow in fractured-vuggy oil reservoirs is presented, which developed based on a novel coupling method. The model introduces the concept of the proportion coefficient of porous media within unit grids and defines a coupling region. It employs an enhanced Stokes–Brinkman equation to address the coupling issue by incorporating the proportion coefficient of porous media, thereby facilitating a more accurate description of the coupling interface through the use of the coupling region. Additionally, this proportion coefficient characterizes the unfilled cave boundary, simplifying the representation of model boundary conditions. The secondary development on the open-source fluid dynamics software is conducted by using matrix & laboratory (MATLAB). The governing equations of the mathematical model are discretized utilizing finite volume methods and applying staggered grid techniques along with a semi-implicit calculation format for pressure coupling—the Semi-Implicit Method for Pressure Linked Equations algorithm—to solve for both pressure and velocity fields. Under identical mechanism models, comparisons between simulation results from this two-phase flow program and those obtained from Eclipse reveal that our program demonstrates superior performance in accurately depicting flow states within unfilled caves, thus validating its numerical simulation outcomes for two-phase flow in fractured cave reservoirs. Utilizing the S48 fault-dipole unit as a case study, this research conducted numerical simulations to investigate the water-in-place (WIP) behavior in fractured-vuggy oil reservoirs. The primary focus was on analyzing the upward trend of WIP and its influencing factors during production across various combinations of fractures and dipoles, thereby validating the feasibility of the numerical modeling approach in real-world reservoirs. The simulation results indicated that when multiple dissolution cavities at different locations communicated with the well bottom sequentially, the WIP in the production well exhibited a staircase-like increase. Furthermore, as the distance between bottom water and well bottom increased, its effect on water intrusion into the well diminished, leading to a slower variation in the WIP curve. These characteristics manifested as sudden influxes of water flooding, rapid increases in water levels, and gradual rises—all consistent with actual field production observations. The newly established numerical simulation method for fractured-vuggy oil reservoirs quantitatively describes two-phase flow dynamics within these systems, thus effectively predicting their production behaviors and providing guidance aimed at enhancing recovery rates typically observed in fractured-vuggy oil reservoirs.