Recently, shallow well casing deformation has occurred frequently, for example, 50 casing damaged wells with depths below 1 200 m were discovered in the Sebei Gas Field in the western China. However, research on the failure mechanism of shallow well casing deformation is rare. Therefore, based on the casing damage data of this gas field and fully considering the influence of geological factors, engineering factors, and production factors on casing deformation and Mises stress, a finite element mechanical model of the "casing-cement sheath-formation" combination was conducted, and simulation of casing deformation and failure mechanical behavior under single factor were carried out, and the sensitivity of single factor and casing Mises stress was determined based on grey correlation analysis method. Based on the sensitivity analysis results, simulation of casing deformation and failure mechanical behavior under comprehensive factors was carried out, and the distribution and variation law of casing Mises stress under single factor and comprehensive factors were obtained. The accuracy and reliability of finite element simulation were verified based on theoretical models and experimental results. The research results indicate that the casing stress concentration is significant under the influence of comprehensive factors. Then the local stress exceeds the casing yield strength, and the plastic deformation accumulates continuously until the casing undergoes deformation and failure, which reveals the mechanism of deformation and failure of shallow well casing. The research results can provide certain technical references for the design and optimization of casing strength.