The frequent occurrence of casing failure has significantly affected the development of shale gas in the Sichuan Basin. Based on engineering and geology analyses, natural fracture/fault slip leads to casing shear deformation during hydraulic fracturing. Hence, natural fracture/fault slip and casing‐cement sheath‐formation assembly finite element models were established to quantitatively examine the characteristics of natural fracture/fault slip and mechanisms of casing shear deformation. Many factors, such as formation elastic property, in situ stress, natural fracture/fault geometry property, fluid pressure, casing elastic property, cement sheath elastic property, and well trajectory, were considered. The simulated results were in good agreement with the field data. The results indicated that natural fracture/fault slip leads to a sharp increase in casing deformation and stress in the adjacent region. Furthermore, factor sensitivity analysis results showed that a higher fluid pressure, larger fracture length, larger fracture dip angle, higher in situ stress difference, lower formation Young's modulus, and shorter distance from the wellbore to the center of the slip surface lead to severe casing stress and deformation. The countermeasures for preventing casing shear deformation involve decreasing the fracturing treatment pressure, reducing the crossing angle between the wellbore and natural fracture/fault, maintaining a safe distance from the wellbore to the large fracture/fault center, and adopting “balanced stress” fracturing operation. Hence, this study proposes a reasonable method to evaluate casing shear damage under hydraulic fracturing.