The domain decomposition method (DDM) is a new method that sprung up in the 1990s for solving the partial differential equation. It has its advantages and wide application perspectives for solving complicated and large-scale groundwater problems in view of the unique combined method and high-effective parallel computing theory in itself. A groundwater flow model of the Wangwangzhuang water source area of Zibo City is presented in this paper. In this model, a coupling of the boundary element method (BEM) and the finite element method (FEM) is made through the overlapping iterative domain decomposition method (DDM), which makes use of their advantages and shows an excellent agreement between the groundwater simulation and the real hydrogeo-logical conditions, and effectively eliminates the distortion of the groundwater flow field caused by the artificial boundary.