Shanxi, Shaanxi, Inner Mongolia, Ningxia, and Gansu (hereafter generally referred as “the Western Area”) are major coal-producing areas in China due to rich coal resources and good mining conditions. However, the Western Area has a serious water shortage. The surface evaporation is huge and a great amount of mine water generated in coal mining is evaporated and lost after discharging to surface. In order to protect and utilize the water resources during large-scale coal mining in the Western Area, Shenhua Group has put forward a technological idea to store mine water in underground mined areas and successfully researched and developed the coal mine underground reservoir technology by solving the technical difficulties of water source prediction, reservoir site selection, reservoir capacity design, dam construction, safety guarantee, water quality control and so on through 20 years of exploration. Now Shenhua Group has successfully established a batch of reservoir in the Shendong Mining Area, obtaining great economic and social benefits. The technology is also extended to other western mining areas, providing an effective path for harmonic mining of coal and water resources in western China.