While excavation activities in mountain terrain regions, the exposure of carbonaceous mudstone could deteriorate the strength under the water-rock interaction, which impacts slope stability and affects the safety of the engineering project. The present study conducted the Point Loading Test (PLT), Acoustic Emission (AE), and Scanning Electron Microscope (SEM) to investigate the degradation of its mechanical properties under the water-rock interaction. The results reveal that: (1) The Total Organic Carbon (TOC) content and water content correspond to a negative correlation, and the carbonaceous mudstone possesses a softening boundary which makes the mudstone strength decay rapidly resulting in the strength decrease by 80% once the water content exceeds the boundary value; (2) Water-rock interaction weakens the acoustic emission capacity and the acoustic emission characteristic in the failure process of carbonaceous mudstone with different TOC can reflect the influence of water-rock interaction on its macroscopic strength and fracture structure deterioration, and the damage degree under immersion is over 50%; (3) The inhomogeneity of water-rock interaction causes unbalanced forces in the rock, as dissolved soluble minerals and oxidation-reduction of organic matter accelerate the deterioration of carbonaceous mudstone making the water-rock interaction is slowed down by the water-swelling filling of minerals in a time period. Therefore, this study has investigated the strength deterioration of carbonaceous mudstone subjected to water-rock interaction from macro-scale and micro-scale perspectives, which provides a reference for preventing and controlling carbonaceous mudstone deterioration resulting from catastrophes.