Coalbed methane is an unconventional gas resource and its special storage and migration laws need a series of evaluations and predictions. By analyzing the flowing characteristics of coalbed methane reservoir and using the known results for the dynamic prediction of natural gas reservoir, a three-dimensional mathematical model for the two-phase flow in coalbed methane reservoir was established. In this model the Langmuir isothermal adsorption law, the first Fick law and the second Fick law were applied to consider the absorption and diffusion of coalbed methane. The goving equations were discretized in a finite-difference form, and a full-implicit simulator (CBM-GW3D) for three-dimensional two-phase flow was developed. The field data of coalbed methane wells located at Liupanshui, Guizhou was used to verify the reliability of this model. This paper also presented the result of the sensitivity analysis for some factors. And this result proved the reliability and validity of this model.