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In this paper, the inhibition of chitosan quaternary ammonium salt (HTCC) in the drilling fluid was studied. The inhibition was evaluated by linear swelling test, mud making test and rolling recovery. The results indicated that the inhibition of HTCC was better than polyether amino, which be used widely in the oil flied as the excellent shale inhibitor. Especially HTCC is an environmental friendly and biodegradable. The inhibition mechanism of HTCC was investigated by Fourier transform infrared spectroscopy, X-ray diffraction, Scanning electron microscopy, Zeta potential, Gel strength measurement analysis. The negative charge in the surface of montmorillonite (MMT) was neutralized by the positive charge. HTCC was absorbed and coated in the surface and intercalated in the interlayer of MMT, which reduced the hydration repulsion of diffuse electric double layer and leaded to the inhibiting hydration of clay. Hydrogen bonding between hydroxyl, amino groups in the HTCC and the surface of clay can be formed in the process. The coordination of electrostatic interaction and hydrogen bonding prevented the water molecules from the gallery of clay, which resulted from the absorption and intercalation of HTCC in the surface and interlayer of MMT. The high molecular weight of HTCC was coated in the surface of MMT, which further expelled the hydration swelling of clay. It kept the high inhibition even if the ether bond hydrolysis partly in high temperature, comparing to polyether amino which the inhibition be reduced. [ABSTRACT FROM AUTHOR]