Simulation of coupled dynamic fluid flow and geomechanical loading of fractured systems shows that complex behaviours can result, even for geometrically simple fracture systems and simple loading. Using a bi-directionally coupled simulation tool, HYDRO-DDA, we examine how fluids and discontinuum processes interact in a fractured, porous rock layer that is being flexed. The changes in fracture aperture, and hence the equivalent permeabilities of this system, exhibit marked localization or delocalization responses in spite of the geometrical and mechanical simplicity of this model. Typically the linked flow-deformation behaviour develops markedly non-linear responses. In some cases the permeability varies by more than three orders of magnitude for minor changes in input variables. Upscaling methods that are suitable representations of this permeability variation are developed. These non-linear behaviours develop in a porous material, which would be expected to suppress non-linear effects. If the range of behaviours seen in this geometrically simple coupled system is typical of other, potentially more complex, fully coupled systems, then the results obtained here can be used to explain the spatially and temporally high variability of the permeability characteristics of fractured systems. © The Geological Society of London 2007.