At present, the water displacement recovery in some medium- and low-permeability reservoirs that cannot be injected and produced in offshore oil fields because of small pores and complex structures is less than 18%. This amount is far lower than 25-40%, which is obtained after water displacement and chemical displacement in medium- and high-permeability reservoirs. Given the current situation of water injection in offshore medium- and low-permeability reservoirs, a new green and environmentally friendly nano-oil displacement technology must be urgently developed to improve the sweep coefficient and oil displacement efficiency of injected water. In this study, the experimental laboratory investigation of a biological nano-oil displacement system suitable for medium- and low-permeability reservoirs is performed. The oil displacement effects, such as changing interfacial tension, viscosity reduction, and oil flushing ability, are also evaluated. The partial differential mathematical model of multicomponent isothermal multiphase seepage is deduced, the mechanism of biological nano-oil displacement technology is finely characterized, and a set of numerical simulation optimization charts of the biological nano-oil displacement process parameters is established. Results show that the biological nano-oil displacement system has adsorption characteristics in porous media, effective miscibility with crude oil, and a minimum contact angle reaching 14.3°. Its interfacial tension can be reduced to the 10-3 level, the viscosity reduction efficiency can reach more than 90%, and the oil washing efficiency can reach more than 70%. Compared with the conventional water and chemical displacement systems, the displacement system in this study has a good oil rock flushing effect and improves oil recovery by 15%. When the injection-production ratio is comprehensively considered, the recommended injection cycle is 6000 ppm. The field test of the biological nano-oil displacement system has been completed, with a validity period of 1 year and a cumulative oil increase of 1.2 × 104 m3, which is still effective. This study provides environmentally friendly solutions for the new chemical displacement of offshore medium- and low-permeability reservoirs. The established process parameter optimization chart has important guiding relevance for the optimization of technical schemes and improvement of the oil increase effect in chemical displacement.