For a two layered coalbed system in possession of the slightly permeable interlayer, a mathematical model was established to describe the methane and water flows between coal seams and the internal migration and the distribution of fluids in a slightly permeable interlayer. Meanwhile, this model has included the potential effect of matrix shrinkage associated with desorption on the coal permeability. The numerical results were obtained by the finite difference method, and then the production forecasts for the two layered coalbed system were conducted in combination with the geological data of a certain area in the Qinshui Basin. Through analyzing the internal migration and distribution of fluids in the slightly permeable interlayer and its effect on the coalbed methane well production, the results indicate that the prediction of the gas production rate and the cumulative gas production will be higher if the permeability of the interlayer is neglected. Furthermore, it is also found that the matrix shrinkage could produce an effect on the coal permeability, thus affecting the production performance.