The effect of underground coal mining on groundwater, ranging from minimal to severe depending on the mined-out panel size, is primarily associated with the change in ground hydraulic permeability. This paper presents a novel panel design method, taking consideration of reducing water loss during the mining operation, which is based on evaluating and ranking the impact of panel size on the hydraulic permeability of weakly cemented strata. The permeability test results of weakly cemented rock samples collected in the Yili No.4 Coal Mine in Xinjiang, China strongly indicates that, in contrast to common rock, their post-peak permeability during the total stress–strain process is lower than the initial permeability due to high porosity and the presence of clay minerals. A numerical modeling based on strain–permeability functions reveals that the post-mining permeability distribution in the weakly cemented overlying strata could be subdivided into three zones: the permeability reduction zone, the permeability restoring zone, and the permeability high-increment zone. The impact significance of different size factors on the post-mining permeability of overlying strata can be ranked in decreasing order as follows: mining height, panel width, and panel length, the quantification of which was based on the variance analysis of such indices as maximum pore pressure and maximum flow velocity. Based on the above findings, the optimal size of panel 21103 in the Yili No.4 Coal Mine was determined and validated by water level field observations.