The acid-fracturing is applied wildly to simulate the formation in vuggy carbonate reservoirs. But it does not figure out clearly the mechanism of fracture propagation while fracture encountering dissolved cavern, and there are few researches considering the influence of dissolved cavern on fracture propagation. In order to study fracture propagation regularity in vuggy carbonate reservoirs, numerical simulations are carried out by the seepage–stress–damage coupling equation based on the damage mechanics theory and the accuracy of the model is validated by comparison with experimental results. Some factors influencing the fracture propagation such as dissolved cavern, formation parameters, and construction parameters are considered. The simulation results show that there are four fracture propagation forms after the fracture encountering dissolved cavern, namely, block, crossing over directly, crossing over after deflection, and deflection. The entire process of injecting the pressure curve can be divided into five stages: initial initiation zone, encountering dissolved cavern pressure released zone, the dissolved cavern inside builds the pressure zone, re-ruptured zone, and fracture propagation zone. The horizontal principal stress difference of the formation controls the tendency of fracture propagation and the generation of branch fractures. It is easy to generate branch fractures under the condition of low horizontal principal stress. The increase in horizontal principal stress limits the deformation of fracture, making it more convenient for fracture to extend toward the maximum horizontal principal stress. The study results are significant for optimizing fracturing construction plans and improving the probability of connection between fracture and dissolved cavern.