Linalool is a chemical fragrance widely used globally in the cosmetic industry. However, its use has some limitations due to its poor aqueous solubility. Encapsulation of linalool in β-cyclodextrin (β-CD) can improve its solubility. Kinetic and thermodynamic parameters are helpful in understanding the reaction mechanism between a guest molecule and β-CD. In this, we paper evaluated the formation of inclusion complex of linalool in β-CD by electrospray ionization mass spectrometry (ESI–MS) and thermoanalytical methods. We determined the kinetic and thermodynamic parameters, and propose a mechanism of thermal decomposition of the linalool/β-CD inclusion complex. The formation of the inclusion complex was confirmed using ESI–MS, differential scanning calorimetry (DSC) and thermogravimetry (TG). The activation energy of thermal decomposition of the inclusion complex was determined by Flynn–Wall–Ozawa and Starink methods to be 212.16 ± 5.06 and 211.00 ± 4.78 kJ mol−1, respectively, showing there was no strong chemical interaction between linalool and β-CD. The proposed decomposition reaction mechanism was a two-dimensional diffusion model.