The protection and utilization of water resources is an important theme of green mining in coal mines. Traditional longwall mining has caused problems such as loss of water resources in mining areas and death of surface vegetation. Especially in the arid and semi-arid ecologically fragile areas, simultaneously rich in coal resources in western China, the negative environmental effects of mining are particularly prominent. Coal mine groundwater reservoir can increase the total amount of water resources available and is an effective technical approach for coordinated exploitation of water and coal resources. Based on the background of shallow underground reservoir in Shendong mining area, this paper uses UDEC software to construct the numerical simulation model of dynamic damage of coal pillar dams under complex stress fields, and reveals the damage evolution law of coal pillar dams under multiple mining actions, and also uncovers the degradation response mechanism of coal pillar dams under dynamic load such as mine earthquake. By extracting the UDEC numerical simulation block unit and contact information, a numerical simulation of water content of coal pillar dams and a water immersion weakening treatment method were proposed. The “seepage-stress” coupling model of coal pillar dams is constructed, thence the development characteristics of surrounding rock fissures in mining space and the coupling development of fracture field and seepage field in coal pillar dams were studied. The results show that the damage degree of the weakened coal pillar dams was intensified, and more interpenetrating cracks were developed, which causes the seepage field to expand deep into the coal pillars, resulting in the accumulation damage effect of “water immersion weakening - coal pillar failure - seepage development - damage aggravation”. The research results provide a scientific basis for the rational design of the coal pillar dams and long-term safe operation of the underground reservoirs.