The hydration and swelling of shale is a persistent challenge in the drilling of oil and gas wells. Many methods of reducing shale hydration and swelling have been developed; however, most of them are high-cost or release pollutants. In this study, we explored the use of pomelo peel powder as a novel additive to water-based drilling fluids for inhibiting shale hydration swelling in an environmentally sustainable manner. We compared the performance of the drilling fluid containing pomelo peel powder to that of traditional shale inhibitors, such as potassium chloride and polyamine. Moreover, hydration inhibition, bentonite precipitation dynamic linear expansion, rolling recovery, and adsorption experiments were conducted to investigate the inhibitory effects of the pomelo peel powder on shale. The results show that the pomelo peel powder solution with a mass fraction of 1% and an optimised particle size of over 160 mesh was acidic, could prevent shale collapse, and could reduce mud loss by filtration. The rolling recovery of shale cuttings reached 95% with the addition of pomelo peel powder, and the powder could also inhibit the hydration of bentonite, prevent clay minerals from dispersing in a solution, and reduce the expansion of bentonite. The inhibitory effect of the powder was slightly worse than that of potassium chloride and polyamine; however, the difference was not significant. The anti-swelling mechanism of pomelo peel powder was then analysed, and we found that fresh pomelo peel powder contains a high number of active substances that reduce the filtration of mud, improve its rheological properties, and hinder the hydration and expansion of clay. Pomelo peel is available worldwide and is easy to obtain as a shale inhibitor. Thus, using pomelo peel powder can effectively alleviate ecological pressure and reduce environmental pollution.