Yes it does. Take a look at this tutorial: http://f.souza.cc/2010/08/flying-with-flask-on-google-app-en...

And here's a skeleton project to get you going: http://github.com/blossom/flask-gae-skeleton

If you need something like Flask for GAE, you will probably find this[1] interesting. It convinced me to use webapp2 over Flask. Webapp2 is actually replacing Google's implementation with the upcoming Python 2.7 release[2].

[1]: http://stackoverflow.com/questions/6774371/flask-vs-webapp2-...

[2]: https://sites.google.com/site/gaepython27testing/