Although stress-dependent porosity and permeability have been applied to majority of models to calculate effective porosity and permeability, effect of adsorbed gas specified as pore volume occupied by adsorbate is not properly accounted. However, nanoscale porosity and permeability of shale rocks would be significantly reduced, since the pore volume is occupied by layers of adsorbed gas molecules. In this paper, we combine stress and adsorption effects to establish a new correlation of shale porosity and permeability. We calculate the stress-dependent pore volume with a constant pore compressibility and obtain the volume of adsorbate from doing regression analysis for density of adsorbed gas by Dubinin-Astakhov (D-A) equation under the supercritical condition. Lab experiments for methane adsorption in shale are measured by five real core samples. The data of Gibbs adsorption obtained by experiments is converted to absolute adsorption so that it could be used to generate the correlation of stress-dependent porosity and permeability including consideration of adsorption effect. The new generated correlation illustrates that the trend of changes in porosity and permeability with pore pressure is quite similar to the trend calculated by Shi-Durucan (S-D) model in application to coalbed methane, which indicates that porosity and permeability decrease with the increase of pore pressure. This tendency is the inverse of changes in stress-dependent porosity and permeability in relation to pore pressure, which demonstrates that adsorption has a larger influence on pore volume than stress, because more gas attempts to adsorb on surface area of matrix as pore pressure increases. The new correlation is added into a numerical model in field-scale, which successfully matches production data from a horizontal well with multistage hydraulic fractures in Barnett shale reservoir. The simulation results point out that without considering the impact of pore volume occupied by adsorbed gas, cumulative gas production would be greatly overestimated during economical producing period in shale gas reservoirs. Thus, overestimation of porosity and permeability in shale might be avoided by applying the new correlation considering both stress and adsorption effects. The correlation incorporated into numerical simulators could provide accurate estimation and evaluation of gas production.