The improved rheological properties of the drilling fluid are very critical for the oil well drilling operation. The present work reports the effect of sodium dodecyl sulfate modified graphene (SDS-Gr) on the rheological features, fluid loss and swelling inhibition mechanism of clay. The rheology and filtration test of drilling mud were conducted after being hot rolled for 16 h at 150oF and under 500 Psi pressure. The inhibition characteristics were evaluated by the dispersion test and shale inhibition durability test, where SDS-Gr modified drilling mud shows the highest recovery as compared to KCl and traditional drilling mud. The inhibition mechanism was investigated by various kind of techniques such as thermogravimetric analysis, scanning electron microscopy, and energy dispersive X-Ray spectroscopy. The outcomes revealed that the addition of SDS-Gr to the traditional drilling mud clearly affect the rheological properties and make it more suitable for the drilling. Moreover, SDS-Gr additive reduces fluid loss by 20% as compared to the mud without SDS-Gr. The Fourier transform infrared spectroscopic study also confirms the adsorption of SDS-Gr on clay. SDS carries the negatively charged functional group that help SDS-Gr to binds to the cations present on the clay surface and graphene plug the pores in the clay. The intercalation and adsorption of SDS-Gr on to the surface of clay hinder water molecules from invading the clay that helps in mitigation of swelling due to hydration. We report for the first time the SDS modified graphene (SDS-Gr) that successfully binds to the clay surface. In order to combine the features of SDS and graphene, the graphene surface is factionalized with SDS that modify the drilling mud rheology, control fluid loss and inhibit the clay swelling.