We investigate the effect of shear dilatancy of a permeable fault on the diffusion of pore pressure and the occurrence of dynamic slip. Starting from the results of Garagash & Germanovich (2012), we include the effect of both inelastic changes of material porosity and hydraulic aperture with slip on the nucleation and arrest of dynamic slip. Locally elevated pore pressure associated with fluid injection leads to a reduction of the fault frictional resistance which may eventually falls below the background shear stress. As a result, a shear crack will start to propagate with an initially moderate velocity (quasi-static) as it is induced by fluid pressure diffusion. As slip accumulate along the fault, the quasi-static crack growth may become unstable due to the slip-weakening nature of friction, resulting in the nucleation of a dynamic rupture until residual frictional strength is reached. The size of such a dynamic rupture (associated with fluid injection) is intrinsically related to both the way the pore-pressure distribution evolves spatially and temporally along the fault and the initial background shear stress. Larger dynamic ruptures are actually obtained for lower overpressure that are spread over larger zones, while a dynamic rupture associated with larger (but more localized) peak overpressure reaches residual friction earlier. Moreover, for large values of overpressure (with respect to the initial effective stress state along the fault), the nucleation length is smaller for lower value of the background shear stress. Dilatancy may locally reduce pore-pressure depending on the ability of the fluid to flow in the newly created void space. Reduction in pore-pressure associated with dilatancy and leak-off in the surrounding material can result in the increase of the fault shear resistance and thus potentially arrest a dynamic rupture. We formulate a plane-strain numerical model of fluid injection in a dilatant permeable fault. The model couples elastic deformation, shear weakening Coulomb friction with dilatancy and fluid flow along the permeable fault. We develop a coupled numerical scheme based on boundary element for elastic deformation and finite volume for fluid flow. We verify our solver first on the non-dilatant impermeable case by comparing our results with the solution of Garagash & Germanovich (2012). We then investigate the effect of shear-dilatancy and its feedback on the nucleation of dynamic rupture in a permeable fault.