Shape sensing as a crucial component of structural health monitoring plays a vital role in real-time actuation and control of smart structures, and monitoring of structural integrity. As a model-based method, the inverse finite element method (iFEM) has been proved to be a valuable shape sensing tool that is suitable for complex structures. In this paper, we propose a novel approach for the shape sensing of thin shell structures with iFEM. Considering the structural form and stress characteristics of thin-walled structure, the error function consists of membrane and bending section strains only which is consistent with the Kirchhoff–Love shell theory. For numerical implementation, a new four-node quadrilateral inverse-shell element, iDKQ4, is developed by utilizing the kinematics of the classical shell theory. This new element includes hierarchical drilling rotation degrees-of-freedom (DOF) which enhance applicability to complex structures. Firstly, the reconstruction performance is examined numerically using a cantilever plate model. Following the validation cases, the applicability of the iDKQ4 element to more complex structures is demonstrated by the analysis of a thin wallpanel. Finally, the deformation of a typical aerospace thin-wall structure (the composite tank) is reconstructed with sparse strain data with the help of iDKQ4 element.