The recently developed Unconventional Fracture Model (UFM*) simulates complex hydraulic fracture network propagation in a formation with pre-existing closed natural fractures, and explicitly models hydraulic injection into a fracture network with multiple propagating branches [1]. The model predicts whether a hydraulic fracture front crosses or is arrested by a natural fracture it encounters, which defines the complexity of the generated complex hydraulic fracture network. While taking into account the leakoff of the fracturing fluid into the formation, the leakoff into the natural fractures should also be considered, especially in low-matrix permeability condi‐ tions. The transmissibility of natural fractures can become significant, and the fracturing fluid can penetrate into natural fractures. Different regions can coexist along the invaded natural fracture: hydraulically opened region filled with fracturing fluid, region of still closed natural fracture invaded by fracturing fluid due to natural fracture permeability, and the region of natural fracture filled with original reservoir fluid. Explicit modelling of hydraulic fractures interacting with permeable natural fractures becomes extremely complicated with the necessity to account for conservation of fluid mass, pressure drop along natural fractures, leak-off into the formation from natural fracture walls, pressure sensitive natural fracture permeability, properties of natural fractures, fluid rheology, while tracking the interface of each region along invaded natural fracture. A main challenge is integrating this hydraulic fracture/natural fracture interaction modelling into the overall hydraulic fracture network propagating scheme without losing model effectiveness and CPU performance. © 2013 Kresse and Weng; licensee InTech. This is an open access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The updated UFM model with enhancement to account for leakoff into the natural fractures will be presented.