Abstract Petrophysical facies modeling plays a key role in reservoir characterization at all levels. At a well level it helps to delineate the layers on basis of certain similar rock physics characteristics, which further can be used in reservoir engineering computations that include layer wise input of properties. At a field level petrophysical facies helps in mapping of reservoir units in a multi-well scenario. Pressure transient tests are performed to determine the reservoir properties like horizontal permeability (Kh), vertical permeability (Kv), skin, knowledge of reservoir boundaries and understanding the reservoir structure up to a level etc. All these are used in the field development planning (FDP). Conventionally, in a pressure transient interpretation a reservoir layer is taken as homogenous, i.e., the reservoir properties are taken uniform across the thickness of sand unit. In highly heterogenous reservoirs, this approach may lead to under-estimation or over-estimation of permeabilities, since a homogenous layer doesn't consider the vertical heterogeneity within the layer. Hence, to address the vertical heterogeneity, multi-layer reservoir model is used in pressure transient interpretations. Each of these layers can be treated as a petrophysical facies. This paper discusses various ways of petrophysical facies modeling and showcases the usage of these layered reservoir models in pressure transient interpretations. The results from both conventional as well as multi-layered model are compared in different type of reservoir sands. It is observed that a multi-layer reservoir model gives better results for vertical and horizontal permeabilities in a vertically heterogenous reservoir. The degree of layer division defines the vertical resolution or refinement of permeability values. In a homogenous sand unit, the conventional model can be used up to a certain degree of accuracy.