Abstarct: One of the most serious problems in oil field development which could potentially cost millions of dollars, is ground subsidence caused indirectly as a result of petroleum production and the resulting compaction. Reservoir compaction can reactivate sub surface geological structures, which may compromise the integrity of reservoir seal, resulting in natural migration of hydrocarbons to other formations. Further, the compaction consequent to subsidence may lead to reduced porosity which can lower the production levels in a formation. Several surveillance techniques are available to detect and monitor compaction and subsidence effects. In this study diffrential radar interferometry and geomechanical modeling applied to evaluation of reservoir compaction and surface subsidence of dorood oil field, south west of iran. Well failure is observed in this field, which may be attributed to the mass balance change in the oil reservoirs due to hydrocarbon extraction. Differential Radar Interferometry is a relatively new method but results of tests and experiments demonstrated the capability of this technique to measure man inducted surface movement to centimeter resolution.There are several sources wich affect the accuracy of InSAR results; the most considerable one being atmosphere.The interferometric processing of kharg island,s (on shore part of dorood oil field) SAR images, dating from 2000 to 2007, was carried using Gamma software. the study area showed over all very low correlation values due to high and periodic rate of vater vapor in persian gulf. Geertsma,s equation baxsed on necleus of strain equations from rock mechanics, is quick and worthy tool in evaluation of subsiding and compacting reservoirs. Using these equation showed that maximum rate of reservoir compaction is twice the maximum subsidence rate. Also in this study a finite difference code is tested and utilized to monitor and measure the reservoir compaction of Dorood oil field. this method has been used to analyze the effects of fluid viscosity, Poisson’s ratio, Young’s modulus, rates of fluid production and injection, and the extent of compaction as a function of time. Also, the relationship between reservoir permeability and porosity were determined and compaction related, reservoir prosity and permeability changes, were calculated. The result of this study can be used together with levelling to optimize the development of compacting reservoirs to take advantage of the compaction drive while minimizing the other problems it creates.