Formation testing while drilling is an innovative technique that is replacing conventional pressure testing in which the fluid sampling is conducted in a relatively short time following the drilling. At this time, mud invasion has just started, mudcake has not formed entirely and the formation pressure is not stable. Therefore, it is important to study the influence of the downhole dynamic environment on pressure testing and fluid sampling. This paper applies an oil-water two phase finite element model to study the influence of mudcake quality and mud filtrate invasion on supercharge pressure, pretest and sampling in the reservoirs of different permeability. However, the study is only for the cases with water based mud in the wellbore. The results illustrate that the mudcake quality has a significant influence on the supercharge pressure and fluid sampling, while the level of mud filtrate invasion has a strong impact on pressure testing and sampling. In addition, in-situ formation pressure testing is more difficult in low permeability reservoirs as the mud filtrate invasion is deeper and therefore degrades the quality of fluid sampling. Finally, a field example from an oil field on the Alaskan North Slope is presented to validate the numerical studies of the effects of downhole dynamic conditions on formation testing while drilling.