Permeability and mechanical behavior of fracture-damaged shale is investigated through a recently developed three-dimensional discrete dual lattice model. The mechanical lattice model simulates the granular internal structure of material at the grain level, and describes the heterogeneous deformation by means of discrete compatibility and equilibrium equations. Fluid flow along intergranular pores and cracks is simulated through a fluid transport network. The variation of permeability for cracked material is captured by coupling mechanical and transport lattice models. The formulated framework is used to simulate fluid flow along cylindrical shale specimens fractured during splitting test. The results show that the simulated effect of cracking on the overall permeability is in general qualitative agreement with available experimental data.