By introducing the elastic boundary value condition, the elastic boundary value problem of extended modified Bessel equation is proposed, we can use the following method to solve it. First, two linear independent solutions of extended modified Bessel equation are obtained. Second, the generating function of solution is constructed. Third, the kernel function of solution is constructed using the elastic right value condition. Finally, the solution is obtained by assembling coefficients with the left boundary value condition. As for its application, a fractal homogeneous reservoir seepage model under the elastic outer boundary condition is established, and solution of the model is obtained. Influences of reservoir parameters on characteristic curves corresponding to dimensionless bottom hole pressure and its derivative are analyzed, which provide a new theoretical basis for exploring the flow law of oil. It can be found that seepage model under the elastic outer boundary condition regards three idealized outer boundary conditions (infinite, constant pressure and closed) and homogeneous reservoir seepage model without considering fractal as special cases, so it can reflect real situation of reservoir better and it is helpful to the development of related well test analysis software. Keywords Extended modified Bessel equation • Elasticity • Fractal homogeneous reservoir • The generating function • The kernel function Mathematics Subject Classification 03C98 • 33B99 • 34B60 • 3B340 List of symbols B Oil volume factor (m 3 /m 3) C Well storage coefficient (m 3 /MPa) Communicated by Jorge X. Velasco.