To investigate the characteristics of stress sensitivity of heavy oil reservoir and heavy oil, experimental study were carried out using core flooding system and on line high pressure caplastometer respectively. Results of experiments show that the core permeability of heavy oil reservoir show exponential decay along with the decrease of fluid pressure, while the viscosity of heavy oil show linear decrease. Based on the experiments, a new productivity equation of heavy oil reservoir with both permeability and viscosity sensitivity being taken into account was developed and field applied. The results reveal that well productivity with the consideration of permeability sensitivity is lower than that without the consideration of it and well productivity with the consideration of viscosity sensitivity is higher than that without the consideration of it. In the case of both permeability and viscosity sensitivity being taken into account, the viscosity sensitivity can to some extent weaken the influences of permeability sensitivity on well productivity. Moreover, well productivity of heavy oil reservoir increases with the increment of viscosity sensibility coefficient. The newly developed productivity equation can simulate the development characteristic of heavy oil reservoir more accurately and has certain advantages over the existing productivity equations.