Considering the problems in the discrimination of fracture penetration and the evaluation of fracturing performance in the stimulation of thin sand-mud interbedded reservoirs in the eighth member of Shihezi Formation of Permian (He-8 Member) in the Sulige gas field, a geomechanical model of thin sand-mud interbedded reservoirs considering interlayer heterogeneity was established. The experiment of hydraulic fracture penetration was performed to reveal the mechanism of initiation–extension–interaction–penetration of hydraulic fractures in the thin sand-mud interbedded reservoirs. The unconventional fracture model was used to clarify the vertical initiation and extension characteristics of fractures in thin interbedded reservoirs through numerical simulation. The fracture penetration discrimination criterion and the fracturing performance evaluation method were developed. The results show that the interlayer stress difference is the main geological factor that directly affects the fracture morphology during hydraulic fracturing. When the interlayer stress difference coefficient is less than 0.4 in the Sulige gas field, the fractures can penetrate the barrier and extend in the target sandstone layer. When the interlayer stress difference coefficient is not less than 0.4 and less than 0.45, the factures can penetrate the barrier but cannot extend in the target sandstone layers. When the interlayer stress difference coefficient is greater than 0.45, the fractures only extend in the perforated reservoir, but not penetrate the layers. Increasing the viscosity and pump rates of the fracturing fluid can compensate for the energy loss and break through the barrier limit. The injection of high viscosity (50–100 mPa·s) fracturing fluid at high pump rates (12–18 m3/min) is conducive to fracture penetration in the thin sand-mud interbedded reservoirs in the Sulige gas field.