This study investigates the effect of proppant distribution on fracture permeability in shale gas reservoirs. Kiwigana shale was used to measure fracture permeability with 40/70 mesh and 100 mesh proppants under various overburden pressure conditions. Different proppant distributions were placed in artificially fractured shale cores for the experiments. The experimental results showed that fracture permeability increased with larger proppant sizes and higher proppant distributions but decreased with higher overburden pressures. In scenarios with the lowest proppant distribution, the fracture permeability rapidly diminished at high overburden pressures. This was attributed to insufficient distribution of proppants supporting the fracture area, leading to embedding in the fracture surface of shale core. Furthermore, fracture propagation sections were categorized based on the proppant distribution and size. Sections further from the hydraulic fracturing point exhibited lower fracture permeability. Based on these findings, a methodology was proposed to determine the fracture permeability reduction factor according to the fracture sections categorized by proppant distribution and size. The reduction factor gradually decreased with increasing reservoir pressure and proppant distribution. This proposed methodology can be used as an input data for the evaluation of the shale gas production. Thus, considering the changes in fracture permeability due to proppant and reservoir pressure is essential for assessing production performance in hydraulically fractured shale gas reservoirs.