In this experiment, cinnamon oil was used as the raw material to produce a water soluble derivative. Cinnamaldehyde, a major constituent of cinnamon oil, is easy to take place nucleophilic addition with saturated sodium bisulfite aqueous solution and generate sodium hydrogensulfite adduct—cinnamaldehyde hydroxyl sulfonic sodium, which has great water solubility, and the yield was 74.64%. The chemical structure of the product was identified by Fourier Transform Infrared Spectroscopy (FTIR). The anti-fungal activity of the product was determined by paper-disc method with wood decay fungi such as Trametes versicolor, Gloeophyllum trabeum and wood stain fungi such as Aspergillus niger, Paecilomyces Variotii and Paecilomyces lilacinus. The anti-fungal experiment results showed that the product has a little anti-fungal activity for the selected stain fungi, especially Aspergillus niger, but the antifungal activity of the product is not good. It has no anti-fungal activity for Trametes versicolor and only a little activity for Gloeophyllum trabeum. The result indicates that the aldehyde group plays an important role in the anti-fungal activity of cinnamaldehyde. Some derivatives without changing aldehyde group should be focused on in the future.