Source overprint and shadow effects can significantly affect controlled-source audio-frequency magnetotelluric (CSAMT) data and mask subsurface geologic structures; however, few solutions have been presented. Based on the traditional observation approach, we develop a new approach to solve this problem. An additional transmitter and measurement zone are introduced in the novel approach to constrain the anomalous body causing source overprint or shadow effects in the inversion. To test this approach, six experimental models are designed. Three-dimensional CSAMT responses on the six synthetic models have been simulated, and the results indicate that source overprint and shadow effects have a strong influence on the data. Strong source overprint and shadow effects are found at low frequencies. The distribution of the source overprint or shadow distortions is affected by the shape of the anomalies below the transmitter or between the transmitter and receiver. We evaluate our approach by comparing the inversion results obtained with the new and traditional approaches based on the six synthetic data sets. The results indicate that the new approach not only effectively resolves the anomalies causing source overprint or shadow distortions but also yields more accurate target results in terms of resistivity value, structure geometry, and position than the conventional scheme. The inversion of field data from Yanqing, China, further verifies the effectiveness of our approach. Compared with the traditional inversion, the new scheme inversion obtains results that are more consistent with the rock type revealed by a drillhole.