Thermal recovery techniques serve as the primary approach for developing heavy oil due to its high viscosity and poor flowability. In this study, we established a high-temperature and high-pressure 3D physical experimental and numerical model based on the unique reservoir characteristics of the sand-mud interlayer in the Long Lake oil sands of Canada, using similarity criteria. Physical and numerical experiments employing steam-assisted gravity drainage (SAGD) were conducted to investigate the impact of sand-mud interlayer properties on the expansion limit of steam chambers during SAGD development. The results indicate that the expansion mode and limit of the steam chamber play a decisive role in heavy oil mobilization. Notably, heat loss during steam chamber expansion and the flow resistance caused by the interlayer are critical factors influencing the SAGD process. The presence of the interlayer extends the mobilization range in the lower portion of the reservoir, but it also limits the upward expansion of the steam chamber, resulting in a reduced mobilization range above the interlayer. Moreover, the steam chamber above the interlayer exhibits a distinct expansion pattern, featuring concave sides and a convex middle, resembling a “positive triangle.” Furthermore, the properties of the sand-mud interlayer and production parameters significantly affect the expansion limit of the steam chamber. Permeability and position exert a substantial impact on recovery, whereas thickness has a minor influence. Specifically, at an injection rate of 20 mL·min–1, steam quality of approximately 0.7, and a production/injection ratio of approximately 1.0, the steam chamber can successfully penetrate interlayers with a thickness of either 3.5 m and a permeability of 100×10−3 μm2 or 4.5 m and a permeability of 200×10−3 μm2.