Abstract: The Lishu Fault Depression in the Songliao Basin holds significant potential for shale gas exploration and development. This study took the shale in the Yingcheng Formation of the Lishu Fault Depression as the research subject. A series of experiments, including total organic carbon (TOC) content measurement, rock pyrolysis, X-ray diffraction (XRD), field emission scanning electron microscopy (FE-SEM), and small-scale hydraulic fracturing physical simulations, were conducted to identify the most favorable shale lithofacies based on an integrated geology and engineering approach. The results indicated that the study area exhibited a high content of clay and carbonate minerals, with well-developed dissolution pores in carbonates and a complex fracture system. The seepage mechanisms of the shale reservoirs included desorption and adsorption, diffusion, slippage flow, and Darcy flow. Small-scale hydraulic fracturing experiments revealed that clay rock content significantly influenced fracturing performance. Specifically, clay-rich lithofacies exhibited low fracture pressure peaks, rapid fracturing pressure declines, and an inability to form transverse fractures. Vertical and bedding-parallel lamellated fractures mostly developed, resulting in poor fracturing efficiency. Through analyzing multi-scale pore structures and reservoir permeability, the study found that shale reservoirs in the study area primarily developed mesopores, which enhanced pore connectivity and volume. These mesopores were also the main contributors to the improved specific surface area and served as the primary channels for fluid seepage. Therefore, slippage flow was identified as the predominant seepage mechanism in the study area. High clay content significantly affected fracturing efficiency. Mixed lithofacies with lower clay content and well-developed dissolution pores demonstrated superior artificial fracture propagation and enhanced permeability after fracturing modification. The most favorable lithofacies in the study area were identified as the organic-rich laminated calcareous mixed shale and the organic-rich laminated siliceous mixed shale. After implementing the integrated geology and engineering production approach in well X-A, shale gas production increased substantially. These findings provide important theoretical support and practical guidance for optimizing shale gas exploration and development in the study area.