Stress-induced fracture deformation is the principal cause for permeability change in geothermal systems. This study focuses on the influence of the nonlinear deformation and dilation effect of fractures on the geothermal system under the action of in-situ stress. By adopting a nonlinear constitutive model of rock fractures and embedding discrete fracture networks, numerical studies are first conducted to investigate the effects of different in-situ stress schemes on fracture aperture evolution using a rigid-body spring method. Based on the anisotropic aperture field of the fracture network caused by the in-situ stress, a finite element method is then used to study the flow and heat transfer process. The effects of different stress schemes on the heat flow transfer process are analyzed. Numerical simulation results show that when the ratio of horizontal to vertical stresses is not sufficient to cause shear dilation effects, the nonlinear normal deformation is the main factor affecting flow and heat transfer. In this case, the heat extraction efficiency is reduced. As the stress ratio increases, the shear dilation gradually becomes the dominant mechanism, and the heat extraction performance is improved. The obtained results provide a practical guide for geothermal site siting and optimizing heat extraction efficiency in geothermal reservoirs.