In this paper, development of an algorithm for generation of unstructured grids applicable to combined discrete fracture networks (DFNs) and continuum reservoir media is described. Automatic grid refinement, grid size control, grid distribution, and grid quality enhancement are among the algorithm’s capabilities. Grid refinement is based on a combination of point insertion and cell subdivision methods. Edge/face-based and cell-based connectivity matrices along with grid size control, grid distribution, and grid quality enhancement measures were automatically employed to refine unstructured grids. Computational unstructured grids are generated in two and three-dimensional fractured reservoir models to demonstrate the algorithm applications.