As development progresses, when the bottom hole flowing pressure or formation pressure is less than the saturation pressure of crude oil in the reservoir, oil and gas two-phase seepage occurs in the reservoir. Due to the characteristics of oil and gas two-phase seepage, after the oil and gas two-phase seepage occurs in the reservoir, the well production will be reduced, or even greatly reduced. Therefore, how to predict the horizontal well capacity better in this case is an important problem that needs to be solved urgently. In this paper, the method and process of establishing the transient calculation model of two-phase flow in horizontal wells are introduced in detail from three aspects: fluid physical properties, reservoir oil-gas two-phase seepage, and the coupling model of Inflow Performance and Flow in Wellbore. The model is more reliable through the verification of production data from five wells in two oilfields.