In calculation of reserves of gas reservoir, the material balance method is a kind of methods that currently use mostly and accurately. The condensate gas reservoir is a kind of complex special reservoirs, with the decline of formation pressure, retrograde condensate phenomenon will occur in the formation in the process of exploitation of gas reservoir, result in gas and liquid two phase, the change of reservoir fluid component and phase is very complex, this retrograde condensation feature makes the pressure drop of condensate gas reservoir not only relevant with the increase of things produced, but also some complex factors like retrograde condensation, especially the output quality of conversion between, namely the wellhead oil gas and bottom oil gas, with volume coefficient can not direct conversion, so the material balance equation are quite different from conventional gas reservoir. This paper established a material balance equation that can describe not only the release of elastic energy, but also the retrograde condensate phenomenon of condensate gas reservoir on the base of principle of mass conservation.