The permeability damage of high‐rank coal reservoirs is the main factor affecting the development of coalbed methane (CBM) in the late production stage. Coal core samples from southern Qinshui Basin were saturated with actual formation water, 1/2 salinity formation water, and distilled water to study the swelling of clay minerals. Then, the mechanism of permeability change caused by water sensitivity and its effect on gas production was discussed. The results show that the permeability decrease caused by flow velocity sensitivity did not occur during the water sensitivity experiments. The permeability damage caused by water sensitivity is mainly the static damage from swelling of clay minerals, especially illite/smectite mixed clays and chlorite. During the process of CBM development, the water sensitivity of coal reservoirs will lead to the sharp increase of Na+ concentration and a decrease of Mg2+ concentration in the produced water. Meanwhile, the clay minerals swell due to the adsorption of more Mg2+ and Ca2+, decreasing the reservoir permeability and gas production rate.