To address the quality deterioration and mold contamination issues in Shanxi walnuts during storage, this study focused on identifying mold species through morphological characterization and molecular biological techniques, evaluating the antifungal efficacy of cinnamon essential oil (CEO) against dominant fungal species, and elucidating its inhibitory mechanisms via mycelial morphology observation, cell membrane damage analysis, membrane lipid peroxidation assessment, and antioxidant enzyme activity determination. The results revealed that the predominant spoilage fungi isolated from moldy walnuts in Shanxi included Penicillium commune, Fusarium solani, Talaromyces verruculosus, Aspergillus tubingensis, Hypoxylon lateripigmentum, Aspergillus terreus, Aspergillus flavus, Aspergillus fumigatus, Aspergillus niger, and Rhizopus oryzae, with H. lateripigmentum and A. flavus being the dominant species. CEO exhibited significant antifungal activity against H. lateripigmentum, with a minimum inhibitory concentration (MIC) of 0.39 g/L that completely suppressed mycelial growth. Scanning electron microscopy (SEM) demonstrated severe morphological damage to fungal hyphae, characterized by increased surface roughness and granular structures. Mechanistic investigations revealed that CEO treatment at MIC induced membrane dysfunction, evidenced by a increase in relative conductivity, along with reductions in reducing sugars (65%), soluble proteins (61%), and ergosterol content (57.41%). Concurrently, superoxide dismutase (SOD) and catalase (CAT) activities decreased, while malondialdehyde (MDA) content significantly increased, indicating aggravated oxidative stress. These findings demonstrate that CEO inhibits H. lateripigmentum by disrupting cell membrane integrity, altering permeability, intensifying lipid peroxidation, and suppressing antioxidant enzyme systems. This study provides theoretical support for developing plant essential oil-based green antifungal technologies to mitigate walnut spoilage during storage and preservation.