Frequent wellbore instability issues caused by shale hydration and dispersion are encountered in water-based drilling fluids. In order to mitigate shale hydration, a hydrophobic graphene oxide (HGO) was prepared as a new shale inhibitor and characterized. The effectiveness of HGO in inhibiting shale hydration was evaluated through hydration expansion, hydration dispersion, and bentonite sheets immersion tests. The expansion height of bentonite in HGO (3.87 mm) was lower than that of commercial shale inhibitors potassium chloride (KCl, 4.64 mm) and polyether amine (PA, 4.33 mm). The shale recovery rate in HGO at 80 °C was 86.25 %, which was superior to KCl (46.60 %) and PA (78.25 %). Furthermore, the morphology of bentonite sheet remained more intact after immersion in HGO. Additionally, the inhibitory mechanism of HGO was studied in-depth, employing zeta potential, particle size, surface tension, wettability, capillary rise height, and scanning electron microscopy (SEM) tests. By virtue of electrostatic attraction, HGO could tightly adsorb to the shale surface, resulting in a hydrophobic blocking membrane, thereby greatly reducing water infiltration. Following interaction with shale at a concentration as low as 0.5 %, the water contact angle exhibited a notable enhancement, rising from 22.49° to 86.69°. And it could also decrease the capillary self-suction capacity of shale, further reducing water adsorption. Consequently, HGO exhibited significant potential for inhibiting hydration in shale drilling.