Although coal permeability has been largely investigated, its changes caused by shear dilation of fractures are rarely reported possibly because it's often underestimated by many models. This work develops a new model of coal permeability with consideration of fracture deformation under influences of both normal and shear stresses. It is coupled with the existing models of coal deformation in the matrix system as well as gas flow and transport in the fracture system. Lastly, the fully coupled mode is applied to calculate the evolution of coal permeability during coalbed gas production. The results show that coal permeability increases with the decreasing reservoir pressure, while the fracture permeability decreases nonlinearly with the increasing normal stress and increases with the increasing shear dilation, all of which are well consistent with field data. The application of this model in a case study also indicates that the fully coupled model with consideration of shear dilation is superior to previous models.