Quasi-deuteron model is investigated, taking account of pair correlation functions in the ground state wave function of atomic nuclei. The formalism of this type makes it possible to use the cluster development method conveniently for the calculations of the expectation values or matrix elements by the model wave functions. Pair nucleon correlation functions are determined phenomenologically but self-consistently, by making use of partly the experimental information about two nucleon systems and partly the theoretical considerations for multiple scattering problem developed by Brueckner, Bethe and their collaborators. In this paper the properties of nuclear matter are investigated as the preliminary discussion. Two nucleon correlation functions are investigated in detail for every possible spin and isospin states of the nucleon pairs. The effect of the exclusion principle on these correlation functions is given in explicit form and it is shown that on the one band the exclusion principle plays the most important role for the appearance of the shell structure, and on the other hand it may have some relationships with alpha particle formation on the nuclear surface. With the use of our ground state wave function, the saturation of nuclear volume energy and that of nuclear density are discussed quantitatively and the velocity dependent one particle potential is constructed self-consistently. High energy nuclear reactions, which the independent particle model without correlation fails to explain, are discussed and it is shown that the nucleon momentum distribution in nuclei is given correctly by our model.