Abstract: Reliable prediction of the shale fracturing process is a challenging problem in exploiting deep shale oil and gas resources. Complex fracture networks need to be artificially created to employ deep shale oil and gas reserves. Randomly distributed minerals and heterogeneities in shales significantly affect mechanical properties and fracturing behaviors in oil and gas exploitation. Describing the actual microstructure and associated heterogeneities in shales constitutes a significant challenge. The RFPA3D (rock failure process analysis parallel computing program)-based modeling approach is a promising numerical technique due to its unique capability to simulate the fracturing behavior of rocks. To improve traditional numerical technology and study crack propagation in shale on the microscopic scale, a combination of high-precision internal structure detection technology with the RFPA3D numerical simulation method was developed to construct a real mineral structure-based modeling method. First, an improved digital image processing technique was developed to incorporate actual shale microstructures (focused ion beam scanning electron microscopy was used to capture shale microstructure images that reflect the distributions of different minerals) into the numerical model. Second, the effect of mineral inhomogeneity was considered by integrating the mineral statistical model obtained from the mineral nanoindentation experiments into the numerical model. By simulating a shale numerical model in which pyrite particles are wrapped by organic matter, the effects of shale microstructure and applied stress state on microcrack behavior and mechanical properties were investigated and analyzed. In this study, the effect of pyrite particles on fracture propagation was systematically analyzed and summarized for the first time. The results indicate that the distribution of minerals and initial defects dominated the fracture evolution and the failure mode. Cracks are generally initiated and propagated along the boundaries of hard mineral particles such as pyrite or in soft minerals such as organic matter. Locations with collections of hard minerals are more likely to produce complex fractures. This study provides a valuable method for understanding the microfracture behavior of shales.