Abstract: East Baghdad Oilfield in Iraq employs horizontal wells to develop reservoirs of the Khasib Formation in the South-2 block. However, in the drilling of the first horizontal well in the block with the Khasib Formation as the target, repeated sloughing and sticking happened drilling through the shale formation of Tanuma, which resulted in borehole abandonment. Researches on formation mineral composition, pore-fracture development, and hydration swelling characteristics show that the Tanuma shale features high clay mineral content, strong water sensitivity, evident macro bedding development, high micro pore and fracture development, and fast hydration swelling rate. As a result, wellbore instability occurs due to the rapid hydration swelling of clay minerals during drilling. Through laboratory evaluation, a high-efficiency anti-sloughing drilling fluid system was developed, by selecting N-Seal plugging agent and U-HIB inhibitor and optimizing the formula of the KCl/polysulfonate drilling fluid system. The evaluation demonstrated that the drilling fluid system with good rheologic characteristics presented strong plugging and inhibition performances, which met the requirements of high-efficiency plugging of Tanuma shale. In field tests of the drilling fluid in three horizontal wells of the South-2 block, Tanuma shale was drilled through without any wellbore instability issues. Laboratory evaluation and field tests show that the application of proposed drilling fluid system can effectively eliminate the technical difficulties of borehole instability in drilling through Tanuma shale, and provide support for the effective development of reservoirs in the Khasib Formation.