Abstract: During the drilling process in fractured formations, the issue of well leakage is severe, which can easily lead to reduced productivity and drilling safety accidents. To address this problem, this study comprehensively the differences of physical properties between mud and gas, coupled flow between matrix and fractures and the hydro-mechanical coupling. A mud loss model for fractured gas reservoirs with a gas–liquid two-phase flow was established, and its accuracy was verified by comparing it with physical experiments. Based on this model, the influence of geological structure, matrix parameters, fracture parameters, and bottom-hole pressure difference on lost circulation was analyzed. Furthermore, the traditional statistical mud-loss model was refined, and a method of leakage rate characterization suitable for fractured gas reservoirs was established. The results indicate that the loss rate increases linearly with the increase in bottom-hole pressure difference and fracture length in conventional fractured gas reservoirs, and increases in a logarithmic function with an increase in fracture width, the growth trend is first rapid and then slow. But for fractured gas reservoirs with developed faults, the loss rate increases exponentially with the increase in fracture width and bottom-hole pressure difference, and decreases logarithmically with an increase in the distance between the wellbore and fault. The conclusions drawn can provide theoretical references for further understanding the lost circulation and plugging technologies in deep fractured gas reservoirs.