Consideration of initial stress state after cement hardening provides a vital basis for the prediction of cement failure, which has been overlooked in previously published methodologies partly due to the difficulties in examining this problem rationally. In the present study, the hoop stress at casing-cement interface during cement hardening is investigated experimentally based on the full-scale casing-cement sheath-formation system (CCFS) facility, which is equipped with the real-time stress-strain measurement capability. The hoop stress at casing-cement interface during cement hardening drops sharply, rather than equating with the initial annulus pressure of cement slurry. It presents a higher drawdown under higher annulus pressure and thinner casing, and a lower drawdown under elastic cement slurry and thicker cement sheath. Furthermore, an analytical model taking the effect of cement hardening into account is developed to predict the integrity of cement sheath. Reliability of the model is verified by comparison with field observations. Excellent agreements are observed. The results illustrate that the tensile cracks are likely to occur at the inner cement (inner surface of cement sheath) by the effect of cement hardening, since the hoop stress at inner cement during cement hardening drops greatly and even becomes tensile. A detailed sensitivity analysis illustrates that an elastic cement slurry with a lower elastic modulus works more effectively, which can resolve the sustained casing pressure (SCP) problem in shale gas wells.