Cellulosic insulation paper is usually used in oil-immersed transformer insulation systems. In this study, the molecular dynamics method based on reaction force field (ReaxFF) was used to simulate the pyrolysis process of a cellobiose molecular model. Through a series of ReaxFF- Molecular Dynamics (MD) simulations, the generation path of ethanol at the atomic level was studied. Because the molecular system has hydrogen bonding, force-bias Monte Carlo (fbMC) is mixed into ReaxFF to reduce the cost of calculation by reducing the sampled data. In order to ensure the reliability of the simulation, a model composed of 20 cellobioses and a model composed of 40 cellobioses were respectively established for repeated simulation in the range of 500−3000 K. The results show that insulating paper produced ethanol at extreme thermal fault, and the intermediate product of vinyl alcohol is the key to the aging process. It is also basically consistent with others’ previous experiment results. So it can provide an effective reference for the use of ethanol as an indicator to evaluate the aging condition of transformers.