CO2 flooding is an effective technology for suppling condensate gas reservoir pressure and mitigating global warming. In this study, numerical simulation studies have been conducted to enhance gas recovery in Pen5 condensate gas reservoir using CO2 flooding. Pen5 reservoir has lasted 20 years of primary depletion, which affected by water invasion and retrograde condensation. In numerical simulation study, the GEM module is applied to implement history‐matching of production data, and good agreement has been achieved. Based on comprehensive geological understanding, production dynamics, and numerical simulation techniques, areas with minimal impact from water invasion and retrograde condensation contamination have been delineated. The comparison between continued depletion and the implementation of CO2 injection as a replacement technology in favorable areas has demonstrated the feasibility of CO2 flooding development in these regions. The analysis of the advantages and disadvantages of using miscible flooding and immiscible flooding was conducted, and the optimal development well pattern was evaluated. In the end, the plan of CO2 flooding of Pen5 reservoir has been designed and the gas production rate in the next 10 years has been predicted. The research findings of this study have reference significance for the practical application of CO2 flooding in developing condensate gas reservoirs.