Abstract: To investigate the intermediate principal stress (σ?) effect on the failure mode of sandstone under biaxial compression, biaxial compression tests with different σ? gradients were conducted using a custom-developed biaxial static-dynamic combined loading system (University of Science and Technology Beijing), integrated with synchronized acoustic emission (AE) monitoring and full-field three-dimensional digital image correlation (3D-DIC) techniques. Based on AE parameters, multifractal analysis, macroscopic fracture characteristics, and full-field strain evolution, the influence of σ? on the failure behavior of sandstone was systematically analyzed. The results indicate:(1) σ? exerts a distinct differential constraint effect on the mechanical properties of sandstone under biaxial compression, with early-to-mid-stage parameters (e.g., closure stress, elastic modulus) stabilizing and late-stage parameters (e.g., peak strength) enhancing with increasing σ?. A critical transition threshold for the σ? effect was identified at 20 MPa. (2) Multifractal analysis of AE parameters and RA-AF crack classification reveal that: at low σ? levels (4–16 MPa), crack evolution exhibits low complexity, with shear cracks dominating (>60%); at the critical σ? level (20 MPa), crack evolution undergoes a significant transition, characterized by increased spatiotemporal complexity and a dominance of tensile cracks (53%); at high σ? levels (24–36 MPa), crack evolution becomes more complex, with shear cracks regaining numerical dominance. (3) Analysis of fracture morphology on the σ?-loaded surface and strain localization on the free surface shows that: at low σ? levels, shear-dominated failure prevails; at the critical σ? level, tensile cracking becomes the primary failure mode; at high σ? levels, conjugate tensile-shear failure develops, accompanied by extensive tensile cracks on the σ?-loaded surface. The study demonstrates that the intermediate principal stress (σ?) effect on sandstone under biaxial compression exhibits significant staging characteristics, with 20 MPa identified as the critical transition threshold for σ?-controlled fracture mechanisms. These findings provide important insights for stability assessment of deep rock masses and design of high-stress rock engineering.