Cultural distortion risk (CDR) threatens and challenges the cultural sustainability of heritage sites. This study adopted a sequential exploratory mixed-method design comprising grounded theory and fuzzy-set qualitative comparative analysis (fsQCA) to analyze the influencing factors, formation process, and avoidance paths of cultural distortion risk. The results indicate that CDR is caused by the “institution-market-production” framework, which involves eight influencing factors and 21 indicators. There are no necessary conditions for CDR formation, but weak cultural production plays a universal core role in forming high CDR. Moreover, our study highlights that the generation logic of CDR consists of four configurations and that the avoidance paths cover three configurations. These findings clarify the generation mechanism of CDR and expand the theoretical system of cultural sustainability research from a risk perspective. Heritage sites can use 21 indicators to reduce the cultural distortion risks by establishing institutional guarantee mechanisms and strengthening multiparty collaborative governance.