Abstract: Based on the gas-water gravity differentiation in the steep coal seams, the three-dimensional gas-water two-phase seepage for steep coal seam was revised. Combined with the actual geological data of the No. 42 coal seam in the Baiyanghe mining area of Fukang, a numerical simulation study on the leakage of coalbed methane from the shallow exposed area of steep coal seam was carried out. The research results indicated the existence of coalbed methane leakage in the shallow exposed area of steep coal seam; when vertical wells with buried depths of 300, 500, and 700 m were produced, the amount of leakage and production ratio are 5.06%, 668.02% and 335.77%, respectively. During production, a large amount of coalbed methane resources will be wasted; the leakage phenomenon did not accompany the entire drainage stage. The amount of leakage firstly increased and then decreased until the phenomenon ends. When using lateral wells for production, the leakage phenomenon lasted for 1 918 days, and the ratio of the amount of overflow and cumulative production is 1.54%. After adding simulation cases of 400 m and 600 m burying depth vertical well, it is found that the maximum and cumulative amount of coalbed leakage are positively correlated with the vertical well burying depth. The starting time of leakage phenomenon reduce with the buried depth increases, and the start time remains constant in the deeper area. In conclusion, coalbed methane leakage is one of the reasons for poor productivity of vertical wells in this area. The use of lateral wells can effectively improve economic benefits and reduce coalbed methane leakage.