Diagnostic Fracture Injection Tests (DFIT), which have also been referred to as Injection-Falloff Tests, Fracture Calibration Tests or Mini-Frac Tests in the literature, have evolved into a commonly used technique to obtain in-situ stress. Simplifying assumptions used in traditional G-function model often lead to an underestimation of the closure stress, even for a planar fracture geometry. When a DFIT is conducted in naturally fractured reservoirs, the stimulated natural fractures can either alter the effective reservoir permeability within the distance of investigation or interact with the hydraulic fracture to form a complex fracture geometry. In this study, we present a new pressure transient model for DFIT analysis in naturally fractured reservoirs, and it is shown that using established methods to pick closure stress often lead to significant over or underestimates, regardless of whether the reservoir is heavily fractured or sparsely fractured. Our proposed “variable compliance method” gives a much more accurate and reliable estimation of closure stress in both homogenous and naturally fractured reservoirs.