Most multiphase flow simulators following fractional flow approach assume incompressibility of fluid and matrix or consider only two phase flow (water and air, water and NAPL). However, in this study, mathematical governing equations were developed for fully compressible three-phase flow using fractional flow based approach. Also, fully compressible multiphase flow simulator (CMPS) considering compressibilities of matrix and fluid was developed using the mathematical governing equations. In order to verify CMPS, the CMPS were compared with analytical solution and the existing multiphase flow simulator, MPS, which had been developed for simulating incompressible multiphase flow (Suk and Yeh 2007; Suk and Yeh 2008). According to the results, solutions of CMPS and MPS and analytical solutions are well matched each other. Thus, it is found that CMPS has the capability of simulating compressible three phase flow phenomena assuming compressibilities of fluids and matrix.