Abstract: In the process of drilling in unconsolidated sandstone and hydratable shale, downhole hole enlargement and shrinkage, even pipe sticking and other complex situations tend to occur easily. To solve these problems, a new concept of critical well diameter was put forward, and its formation principles and influential factors were investigated by means of theoretical analysis and field simulation. The related laws of critical well diameter to reflect the scour of drilling fluid to the wall were established. In order to quantitatively describe the scour degree of borehole wall and the change situation of borehole, wall scour coefficient was defined and used to reflect the scour capacity of drilling fluid to the wall under the joint effect of the rheological parameter and displacement of the specific drilling fluid. To satisfy the requirements on the scour capacity from the walls in different strata, the theory and engineering application method on rheological parameter and displacement optimization of drilling fluid based on wall scour coefficient were proposed and extensively applied to drilling design and construction optimization. It is indicated that the rheological parameter and construction displacement optimization theory of drilling fluid based on critical well diameter provides a kind of feasible technology for designing and optimizing the rheological parameter and construction displacement of drilling fluid.