Drilling-induced lost circulation should be managed before and during fracture initiation rather than after they propagate to form large fractures and losses become uncontrollable. Recent studies indicated the potentially critical role of filtercake in strengthening the wellbore through formation of a pressure-isolating barrier, as well as plugging microfractures during fracture initiation. In this study, an experimental investigation was conducted to understand the role played by filtercake in the presence of lost circulation materials (LCMs). A modified permeability plugging apparatus (PPA) with slotted discs was used to simulate whole mud loss through fractures of known width behind filtercake. Cumulative fluid loss upon achieving a complete seal and the maximum sealing pressure were measured to evaluate the combined effects of filtercake and LCMs in preventing and reducing fluid losses. The effects of some filtercake properties (along with LCM type, concentration and particle size distribution) on filtercake rupture and fracture sealing were investigated. The results indicate that filtercake can accelerate fracture sealing and reduce total mud loss. Efficiently depositing filtercake while drilling can reduce the concentration of LCM that is required to plug and isolate incipient fractures.