By using a two-dimensional fully nonlinear compressible atmospheric dynamic numerical model, the propagation of a small amplitude gravity wave packet is simulated. A corresponding linear model is also developed for comparison. In an isothermal atmosphere, the simulations show that the nonlinear effects impacting on the propagation of a small amplitude gravity wave are negligible. In the nonisothermal atmosphere, however, the nonlinear effects are remarkable. They act to slow markedly down the propagation velocity of wave energy and therefore reduce the growth ratio of the wave amplitude with time. But the energy is still conserved. A proof of this is provided by the observations in the middle atmosphere.