The internal structures of a fault zone in interbedded sand–clay sequences were examined by coring across the Xicaogu fault in the Bohai Bay Basin. The Shulu borehole penetrated the Xicaogu normal fault. The fault core, damage zone, and surrounding rock were obtained. The fault core was characterized by fault breccia and fault gouge. Small faults, deformation bands, and shear fractures characterized the damage zone. Our study revealed that porous sandstone cataclasis caused the formation of the deformation bands, and the low-porosity to nonporous sandstones fracturing caused the formation of shear fractures. With increasing displacement, the degree of cataclasis in the porous sandstone increased, and ultracataclastic bands were subsequently formed. Further fracturing of low-porosity to nonporous sandstones created fault breccia. Small faults characterized by sand, silt, or clay smears were observed in the interbedded sand–clay sequences. Sand and silt smears were characterized by granular flow, which is accompanied by cataclasis. Some smears exhibited compositional layering. Continued deformation caused a sand–clay mixture to form along the fault. Clay-rich smears could lose their continuity and mix with breccia. The presence of cataclastic bands and smears could decrease the permeability and increase the capillary pressure in a reservoir. However, the deformation mechanisms involved in low-permeability fault zone formation were different. Therefore, when the geological fluid sealing capacities of fault zones in interbedded sand–clay sequences are analyzed, the differences in the deformation mechanisms and internal structures in different intervals need to be considered, and applicable evaluation methods need to be used.