The existence of stress sensitivity effect made the percolation mechanism of low-permeability reservoirs significantly complex. Further, numerous reservoirs have composite stratum properties in actual development procedure. This paper based on the concept of permeability stress sensitivity presents an unsteady flow model for horizontal well taking both stress sensitivity and composite reservoir into account. Analytic solutions for the transient pressure and the rate decline behaviors are obtained by comprehensive utilization of regular perturbation method, Laplace transformation, orthogonal transformation, and Stehfest numerical inversion. The example analysis verifies that the proposed model is reliable and practical. Likewise, there is a discussion of the influence of permeability modulus and other relevant parameters on the transient pressure and the rate decline for horizontal well in stress-sensitive composite reservoir. The work of this paper improved the previous researches and provided a more accurate basis for transient flow analysis and formation evaluation of this typical reservoir.