Lattice vortex method by introducing virtual vortices has been proposed in this paper. In our method, a staggered lattice for the velocity and the vorticity is used and the virtual vortices are placed to approximate the velocity field obtained by the Biot-Savart law. Velocity field can be determined by calculating only the induced velocities from the neighboring vortices. This point is completely different from the conventional method using the Biot-Savart law and the calculation time was almost half compared to that of using the Biot-Savart law. The discretization error of our method is proved to be the second-order by taking an adequate distribution of the vortices and the result of calculations of Burgers' equation agrees well with the theoretical solution. The calculation result of a cavity flow shows a good agreement with the result obtained by the conventional finite difference method. The lattice vortex method is shown to be useful for not only outer flows but also inner flows.