Unconventional shale gas reservoirs have become the focus of considerable attention as primary energy resource over the past decades worldwide. Economic gas rate requires the creation of complex fracture networks which could be characterized by the stimulated reservoir volume (SRV) concept. Microseismic mapping technique could provide a measurement of the overall SRV and an estimate of the fracture patterns. Accurate and efficient numerical simulation of these reservoirs is challenging. There is substantial physical complexity involving a number of tightly coupled mechanisms in the modeling of gas production. The fabric of shale system with multicontinuum nature comprises organic material, inorganic matrix and natural fracture. The complexity is further amplified by the complex fracture networks with a wide range of fracture length scales and topologies. In this work, we develop a comprehensive physics-based, multicontinuum model to predict shale gas reservoir performance. The model is designed to incorporate the spectrum of known physics inherent in shale system, such as multiphase behavior, desorption, non-Darcy transport in ultra-tight porous media, high-velocity turbulent flow and rock un-consolidation within natural fractures. We also implement a novel hybrid fracture model (UDFM-MINC) that effectively integrates discrete fracture-matrix model (DFM) with continuum type of approach for simulating the multiscaled stimulated shale formations. Primary fractures are described using DFM with unstructured triangular grids (UDFM), and small-scale fractures are handled by the multiple interacting continua (MINC) model in a fully coupled manner. Optimized local grid refinement (LGR) technique is employed to accurately capture the transient flow regime around the primary fractures. We discuss the numerical implementation for the developed model, and present simulation results to demonstrate the model applicability. We also conduct preliminary sensitivity studies to determine the key factors of reservoir and fracture that affect the production performance of unconventional gas wells. (C) 2015 Elsevier Ltd. All rights reserved.