The in situ stress (ISS) and permeability determine the coalbed methane (CBM) development method and extraction efficiency to a certain extent. Based on the data of the CBM well test and microseismic monitoring in the Jurassic Yan'an Formation, a prediction model of the ISS is established, and its influence on permeability and CBM development in the southwestern Ordos Basin, China, is discussed. The results show that the orientations of maximum principal stresses (Shmax) in the study area's eastern, central, and western parts are NE–SW, SEE–NWW, and NNW–SSE, respectively. With the increased burial depth, the main ISS parameters show an S-shaped variation. The study area's ISS state can be divided into Shmax > vertical stress (Sv) > horizontal minimum principal stress (Shmin) (<420 m), Sv > Shmax > Shmin (420 m–800 m), and Shmax ≈ Sv > Shmin (>800 m), and the transformation depth of the ISS field is 550 m and 1000 m. The lateral pressure coefficients (λ) ranged from 0.30 to 1.19, with an average of 0.69. The λ, Shmax/Shmin and Shmin/Sυ of the stress field are small, which indicates that the horizontal tectonic stress is weak. The coal reservoir's permeability is distributed between 0.0084 and 6.84 mD (av. 1.13 mD). Affected by the variation of the ISS state in the vertical direction, the coal reservoir permeability shows obvious zoning. The tensile stress field is beneficial to high-permeability coal reservoir formation, but it is constrained by the coupling constraints of a coal reservoir's confining pressure and effective stress. The coal reservoirs are in a normal fault stress state, which is beneficial for improving their hydraulic fracturing effect. Since the Shmin in the study area is always smaller than the Sυ, the height of the fracturing fracture should be controlled in the fracturing of the coal reservoir to avoid the overlying aquifer being connected by fracturing fractures. The above new insights have important guiding significance for the hyperpermeability CBM reservoir prediction, well-bore structure and hydraulic fracturing design in the Ordos Basin.