Hydraulic fracturing and well drilling bring water into shale reservoirs. The water interacts with the shale, which can destabilize the wellbore and impact the rate of gas production from the reservoir. Although wellbore instability has been extensively studied, the effect on gas production requires further work. In this work, the interactions of water with shale from China's Sichuan Basin were studied from macroscopic and microscopic perspectives. The visual information provided by studying shale at the microscopic scale helps in understanding the effects of water-shale interactions on gas production. We first studied the shale's wettability and water adsorption capacity and then investigated its water adsorption characteristics, swelling strain, and Young's modulus with different water contents. Field-emission scanning electron microscopy was also used to observe the storage of water in the shale matrix and the interaction of shale minerals with water. Our experimental data show that the adsorption capacity of the shale is low, although it is overall hydrophilic. The adsorption data indicated that diffusion may be the main mechanism for water adsorption by the sample under our experimental conditions. Capillary pressure may also help transport water into the matrix. The shale sample exhibited free swelling and its Young's modulus decreased after uptake of water, which may be attributed to hydration of clay minerals in the shale sample. Microscopic observations showed that some water remained in the sample's pores even when the water vapor pressure was much lower than the saturation pressure. This suggests that the residual water may be difficult to remove from the reservoir and that hydraulic fluid would have a greater influence on smaller pores than on larger pores.