On 22 May 2021, an earthquake (98.3° E and 34.59° N) struck Maduo town in Qinghai province, occurring along a relatively obscure secondary fault within the block. We utilized 105 archived Sentinel-1A/B acquisitions to investigate the coseismic deformation and the evolution of postseismic displacements in both the temporal and spatial domains, as well as the associated dynamic mechanisms of the 2021 Maduo earthquake. The interference fringes and coseismic deformation revealed that the primary feature of this event was the rupture along a left-lateral strike-slip fault. The released seismic moment was close to 1.88 × 1020 N·m, which is equivalent to an Mw 7.45 event. Simultaneously, the maximum coseismic slip reached approximately 4 m along the fault plane. The evolution of postseismic displacements in both the temporal and spatial domains over 450 days following the mainshock was further analyzed to explore the underlying physical mechanisms. Generally, the patterns of coseismic slip and afterslip were similar, although the postseismic displacements decayed rapidly over time. The modeled afterslip downdip of the coseismic rupture (at depths of 15–40 km) effectively explains the postseismic deformation, with a released moment estimated at 4.57 × 1019 N·m (corresponding to Mw 7.04). Additionally, we found that regions with high coseismic slip tend to exhibit weak seismicity, and that afterslip and aftershocks are likely driven by each other. Finally, we estimated the Coulomb Failure Stress changes (ΔCFS) triggered by both coseismic rupture and aseismic slip resulting from this event. The co- and postseismic ΔCFS show similar patterns, but the magnitude of the postseismic ΔCFS is much lower (≤0.01 MPa). We found that ΔCFS notably increased on the Yushu segment of the Garze-Yushu-Xianshuihe Fault (GYXF), as well as the Maqin–Maqu and Tuosuo Lake sections of the East Kunlun Fault (EKF). Therefore, we infer that these fault segments may have a higher potential seismic risk and should be carefully monitored in the future.