Soft rot caused by Botryosphaeria dothidea leads to massive economic losses in the kiwifruit industry. Natamycin is a natural antimicrobial preservative that effectively prevents postharvest decay and preserves fruit quality. However, the ability to control kiwifruit soft rot and potential antifungal mechanisms have not been explored. In this study, the inhibitory impact of natamycin against soft rot caused by B. dothidea, as well as its putative action mechanisms were investigated. The results indicated that 2 mg L−1 natamycin effectively inhibited mycelial growth and spore germination of B. dothidea in vitro. Natamycin caused B. dothidea hypha to shrink and deform, along with vacuolation and plasmolysis in hypha cells, as observed by scanning electron microscopy (SEM) and transmission electron microscopy (TEM). Likewise, natamycin stimulated the accumulation of reactive oxygen species (ROS) in the hypha. The inhibition effect of natamycin on B. dothidea inoculated in kiwifruit was dose-dependent, with 500 mg L−1 natamycin significantly decreasing the incidence of soft rot to 35%. Furthermore, natamycin induced disease resistance in kiwifruit tissue by activating the antioxidant enzymes superoxide dismutase (SOD) and catalase (CAT), increasing the antioxidant compound total phenol, maintaining a low level of malondialdehyde (MDA), and repressing the activity of four cell wall degrading enzymes, as well as gene expression of β-galactosidase (β-Gal) and polygalacturonase (PG). Further field research revealed that pre-harvest treatment combined with the postharvest natamycin application significantly reduced the natural decay incidence of kiwifruit while having no negative effect on soft-ripe quality. In conclusion, our findings proved that natamycin has an antifungal effect on B. dothidea and may be applied as a safe preservative to reduce soft rot.