Flue gas is composed of N2 and CO2, and is often used as an auxiliary agent for oil displacement, with good results and very promising development prospects for co-injection with steam to develop heavy oil. Although research on the oil displacement mechanism of flue gas has been carried out for many years, the flow characteristics of steam under the action of flue gas have rarely been discussed. In this paper, the flow resistance and heat transfer effect of flue gas/flue gas + steam were evaluated by using a one-dimensional sandpack, a flue gas-assisted steam flooding experiment was carried out using a specially customized microscopic visualization model, and the microscopic flow characteristics in the process of the co-injection of flue gas and steam were observed and analyzed. The results showed that flue gas could improve the heat transfer effect of steam whilst accelerating the flow of steam in porous media and reducing the flow resistance of steam. Compared with pure steam, when the volume ratio of flue gas and steam was 1:2, the mobility decreased by 2.8 and the outlet temperature of the sandpack increased by 35 °C. This trend intensified with an increase in the proportion of flue gas. In the microscopic oil displacement experiments, the oil recovery and sweep efficiency of the flue gas and steam co-injection stage increased by 4.7% and 32.9%, respectively, compared with the pure steam injection stage due to the effective utilization of blocky remaining oil and corner remaining oil caused by the expansion of fluid channels, the flow of flue gas foam, and the dissolution and release of flue gas in heavy oil.