Faulted monoclinal structures incorporate folds and faults. Their displacements cause stress release of differing degrees in various areas. Furthermore, the faults commonly extend to the deep strata, which may lead to the flow of boiling inclusions and localized thermal stresses. A complex distribution of in situ stress appears in such areas, which makes it challenging to drill wellbores. In this study, we first analyzed the geological structure and the factors influencing in situ stresses of a faulted monoclinal structure in southwest Qaidam Basin. Second, based on Huang’s model, a mathematical model for calculating the horizontal principal stress of the faulted monoclinal structure was developed considering the stress release from fault and fold displacements and the outflow from boiling inclusions. Third, the magnitudes of the horizontal principal stresses of the study area were obtained using this new mathematical model, and the predicted values had an average error of 2.63% according to a comparison with the results of the hydraulic fracturing field measurements. Fourth, an in situ stress distribution in this area was established by combining the horizontal principal stresses’ magnitudes and the maximum horizontal principal stress direction. Finally, based on the in situ stress distribution of the study area, the mud density and trajectory for drilling the third stage of well Z207 were determined. The field application revealed that the design parameters met the engineering requirements satisfactorily, which indicates that this mathematical model can predict the horizontal principal stress of the faulted monoclinal structure in southwest Qaidam Basin.