Pseudo-reservoir stimulation in horizontal well is an effective technique for indirectly extracting coalbed methane (CBM) in soft coal from the surrounding rocks (pseudo-reservoir). However, systematic studies of the theory and on-site application of this technique are still lacking, which severely hinders its application. In this paper, the technical principles of pseudo-reservoir stimulation are analyzed firstly, and then, the technical advantages are demonstrated by experimental tests and theoretical analysis. The results show that the pseudo-reservoir generally possesses considerable gas adsorption capacity, with the gas content of 1.56–4.22 cm³/g (avg. 2.51 cm³/g) in Well XC-01, which can be extracted as supplementary resources. The fracability of the pseudo-reservoirs is 0.73–0.92, which is much higher than that of the coal seam, i.e., 0.03–0.43. Meanwhile, the compressive and tensile strength and cohesion of the pseudo-reservoir are higher than those of the coal seam, indicating pseudo-reservoir stimulation is more conducive to forming fracture network, and maintaining wellbore stability and fracture conductivity. The technical feasibility of pseudo-reservoir stimulation is determined by the regional geological conditions, showing simple tectonic conditions and well-developed surrounding rocks with high fracability and mechanical strength but low permeability, water sensitivity and water content are beneficial for the technique application. Note that the fracture conductivity in pseudo-reservoir is more stable and higher than that in coal seam, pseudo-reservoir stimulation is beneficial for the CBM extraction from both hard and soft coal seams. By minimizing the gas diffusion distance, this technique overcomes the technical obstacles to the CBM commercialized production in soft coal.