Fusarium, a major phytopathogen damages field crops causing huge losses to agriculture. This study evaluated the anti-Fusarium effects of essential oil distilled from artemisinin extraction residues (EOAR). The chemical composition of EOAR was analyzed and its growth inhibition effect was examined against four Fusarium species. The underlying molecular mechanism was uncovered by studying the changes in growth rate, mycelial morphology, biomolecular leakage, electrical conductivity, and transcriptome of the fungi. The results indicated that the main components of EOAR (such as camphor, borneol, etc.) significantly inhibited the growth of Fusarium by destroying the morphology and structure of cytomembrane, and promoting the leakage of intracellular biomolecules. Transcriptome analysis showed that the differentially expressed genes after treatment with EOAR were mainly related to the transmembrane transport pathway and activity, carbon metabolism, and ribosome function of F. graminearum. Our findings suggest that oily waste from Artemisia annua after extraction of artemisinin can be recycled for the production of EOAR, which can be a potential green and effective fungicide against Fusarium.