With the continuous growth of global energy demand and the late stage of conventional oilfield exploitation, the demand for developing and utilizing low-permeability heavy oil reservoirs is becoming increasingly urgent. However, the exploitation of low-permeability heavy oil reservoirs faces many challenges due to their high viscosity, low permeability, and complex geological conditions. To overcome these challenges, researchers have gradually introduced SC-CO2 as an oil displacement agent in the exploitation of heavy oil reservoirs. However, the oil displacement mechanism of SC-CO2 in low-permeability heavy oil reservoirs and its improvement mechanism are still not completely understood. The article provides a detailed study and understanding of the oil displacement mechanism of SC-CO2, which involves the expansion of heavy oil volume through SC-CO2 dissolution. This mechanism reduces the capillary resistance and flow resistance during the oil flow process. The permeation of CO2 disrupts the internal structure and arrangement of heavy oil, reducing its viscosity. CO2 extracts both light and heavy components from the heavy oil, reducing the residual oil saturation. In addition, the mechanism of improving the effect of oil displacement agents such as nanoparticles, polymers, and surfactants on SC-CO2 displacement was also explored. By further exploring the mechanisms and improvement mechanisms of SC-CO2 displacement for heavy oil, it can guide the selection and optimization of oil displacement agents. Furthermore, understanding the mechanism can also provide a theoretical basis for engineering practice and technical innovation. While the research on CO2 flooding is analyzed and evaluated, the obstacles and challenges that still exist at this stage are indicated, and future research work on CO2 in low-permeability heavy oil reservoirs is proposed.