We study the Aharonov-Bohm effect in a coupled 2$\times$2 quantum dot array with two-terminals. A striking conductance dip arising from the Fano interference is found as the energy levels of the intermediate dots are mismatched, which is lifted in the presence of a magnetic flux. A novel five peak structure is observed in the conductance for large mismatch. The Aharonov-Bohm evolution of the linear conductance strongly depends on the configuration of dot levels and interdot and dot-lead coupling strengths. In addition, the magnetic flux and asymmetry between dot-lead couplings can induce the splitting and combination of the conductance peak(s).