The study of interfacial transition zone characteristics in manufactured sand mortar is of great significance in enhancing the strength and durability of manufactured sand mortar. The interface microstructure, microzone mechanical strength, and non-uniform deformation of mortar composed of river sand and manufactured sand were examined through scanning electron microscopy (SEM), nanoindentation, and three-dimensional digital image correlation (3D-DIC) techniques. The results indicate that the width of the interfacial transition zone in manufactured sand mortar exceeds that in river sand mortar. Nevertheless, the interface cracks between fine aggregate particles and mortar matrix are smaller in manufactured sand mortar. Notably, microcracks are prone to occurring at the edges of manufactured sand particles. The elastic modulus of the interfacial transition zone in manufactured sand is slightly higher than that in river sand, suggesting that manufactured sand can mitigate the edge effect of aggregates to a certain extent. The non-uniformity of shrinkage deformation is most conspicuous in sandstone manufactured sand mortar, displaying larger internal tensile strains, ultimately leading to a more severe distribution of damage. This implies that an excessive proportion of blade-shaped particles in fine aggregates may heighten the risk of cracking in mortar.