A data simulator and reduction package for the Devasthal Optical Telescope Integral Field Spectro- graph (DOTIFS) has been developed. Since data reduction for the Integral Field Spectrograph (IFS) requires complicated procedures due to the complex nature of the integral spectrograph, common reduc- tion procedures are usually not directly applicable for such an instrument. Therefore, the development of an optimized package for the DOTIFS is required. The data simulator observes artificial object and simulates CCD images for the instrument considering various effects; e.g. atmosphere, sky background, transmission, spectrograph optics aberration, and detector noise. The data reduction package has been developed based on the outcomes from the DOTIFS data simulator. The reduction package includes the entire processes for the reduction; pre-processing, at-fielding, and sky subtraction. It generates 3D data cubes as a final product, which users can use for science directly.