During the drainage and production of coalbed methane (CBM) wells, the constant changes in stress and water saturation of reservoir restrict the dynamic change of the reservoir permeability. By carrying out stress sensitivity experiments with different water saturations in coal, the correlation between permeability and the coupling of effective stress and water saturation was analyzed. The water saturation sensitivity and stress sensitivity of reservoir were evaluated by the stress sensitivity index (S), permeability damage rate (PDR), and stress sensitivity coefficient (αk), and the change law of coal permeability under different stresses with different water saturations was revealed. The results showed that the coal reservoir permeability decreased with increasing stress following a negative exponential function and decreased nearly linearly with increasing water saturation. In addition, the coal water saturation sensitivity was positively correlated with effective stress, and the coal stress sensitivity was positively correlated with water saturation. Finally, a mathematical model for predicting coal permeability that considered the impacts of water saturation and effective stress was established, revealing the controlled mechanism affecting the permeability change.