This study conducts a field indoor simulation test, SEM observation, and penetration test to determine the bearing capacity of the dynamic driving pile in the mudstone foundation. It comprehensively analyzes the variation laws of structure and strength of mudstone around piles after piling. Indeed, the strength of mudstone structure is significantly reduced from outside to inside. Therefore, the numerical simulation of piles in mudstone should consider the actual characteristics of soil damage around piles. The strength of mudstone after pile driving damage is measured, and the scatter diagram depicting the relationship between mudstone strength and pile side distance is produced. Then, the best-fitting curve of the relationship between the strength ratio and the distance ratio of the simulated pile driving test is established by the nonlinear fitting of multiple curves. A numerical simulation method is proposed to consider the damaged area and parameters surrounding the pile. The range of soil damage caused by pile driving in the mudstone foundation is determined to be two times that of the pile diameter. The disturbance area is divided into four parts on average, and the width of each part is 0.5d. The simulation results are compared to the conventional approach of uniform parameter assignment to prove the rationality of the method.