In this paper, a mass conservative overset grid method is developed for simulating unsteady, incompressible flows. The governing equations are solved using a second-order accurate, finite volume method based on fractional step method. A direct interpolation algorithm is used to exchange variables between two grid systems. The algorithm satisfies global and local mass conservation in each grid. The present method is used to solve flow around a circular cylinder, cavity flow, channel flow, and fairly good results are obtained.