Flood has two cases, namely “non-source flood” and “source flood”. For each case, flood inundation analysis method based on DEM is discussed. In the paper, Kaiyuan city of the Red River state in Yunnan Province is chosen as experimental area. This region has abundant rainfall, numerous rivers and frequent flood disasters. After calculate the flood area of this region, overlay analysis is used to predict villages threatened by the flood, which using flood area layer and village layer. Finally, Flood inundation map is displayed visually in ArcSence in three dimensions. The result shows that these flood inundation analysis methods are effective and scientifically to simulate flood inundation, which can be a precise reference of loss prediction and guide rescue work.