Experimental research has been carried out on a single cylinder naturally aspirated spark ignition engine which was modified to operate with coal-bed gas fuel to investigate the method of improving operation stability and lean burn limit. Varied fuel composition with methane concentration 30–100% and CO2 volumetric fraction 0–0.7 was employed to simulate coal-bed methane (CBM) and coal mined methane (CMM), respectively. Hydrogen was then employed to improve operational stability and lean burn limit. The results show that a stable operation range of the engine was obtained under most of the fuel compositions even if up to CO2 volumetric fraction = 0.6 was employed. Besides lean burn limit, the unstable operation with COVIMEP > 10% only appears at lean burn limit as well as CO2 volumetric fraction = 0.7 at each equivalence ratio. The lean burn limit of coal-bed gas has been significantly enlarged from the equivalence ratio equals to 0.6–0.4 by hydrogen addition. Stable operation with COVIMEP < 5% at the equivalence ratio equals to 0.4 has also been obtained at some high hydrogen concentration conditions. Hydrogen addition induced the reduction of both carbon monoxide (CO) and total hydrocarbon (THC) emissions at all equivalence ratio conditions, especially at the equivalence ratio equals to 0.4 and 0.6. CO2 addition improves NOx emission significantly; however, high CO2 volumetric fraction will lead to unstable operation, which results in deteriorated CO and THC emissions. Hydrogen addition has benefits of improving operation stability and enlarging lean burn limit of coal-bed gas engine, which has practical significance to improve the application of coal-bed gas engine technology.