To investigate a new biological control method and reveal the anti-microbial mechanism of tea tree oil (TTO) against Botrytis cinerea in postharvest fruits and vegetables, the fungal mycelium grown in liquid medium was collected as test material, and then treated with twice MIC (minimum inhibitory concentration) of TTO. Fluorescence electron microscopy (FEM), scanning electron microscopy (SEM), and transmission electron microscopy (TEM) were used to study the effects of the treatment on the membrane permeability, mycelial morphology, and ultrastructure, respectively. Additionally, the accumulation of reactive oxygen species (ROS), changes in enzyme activity, and contents of the substances in mycelia during TTO treatment were explored. The results indicated that after TTO treatment, the fluorescence intensity of the treated group was higher than that of the control, indicating that TTO can increase the cell membrane permeability by destroying its integrity. Additionally, several hyphae were shriveled and dry; their cytoplasm was disintegrated and contained debris-like material. TTO led to the accumulation of hydrogen peroxide (H2O2) in the mycelium and induced higher superoxide dismutase (SOD) and catalase (CAT) activities, as well as ascorbate-glutathione (AsA-GSH) cycle metabolism, in the treatment group than in the control, suggesting that the anti-bacterial activity of TTO is achieved by increasing cell membrane permeability, destroying cell structures, and inducing high ROS production.