Currently, the oil production decline after water breakthrough is lack of theoretical research, and the production decline forecasting methods need to be improved. Based on the percolation theory of relative permeability curve and material balance equation, the new model for oil production decline is derived. The research shows that with the oil saturation is getting lower and lower, the relative permeability of oil phase is getting weaker and weaker, and the relative permeability of water phase is getting stronger and stronger. The production decline law is determined by the relative permeability curve expression; three common production decline models could be derived by ignoring the ratio of oil water viscosity ratio to the relative permeability of water phase from the new model. The new model is a more uniform production decline equation, giving consideration to several factors. The research has a certain reference value for deeply understanding the production decline and for increasing forecast accuracy.