In the era of low carbon and environmental protection, sustainable development ideas win support among the people. Vegetable oils have excellent environmental performance compared with traditional mineral insulating oils. The aging characteristics of insulating paper in vegetable oil have been discussed in experiments, but the deterioration mechanism at the microscopic level is still lacking. In this paper, the microscopic deterioration mechanism of insulating paper in vegetable oil and mineral oil is investigated by molecular dynamics. In addition, the intermolecular properties of insulating paper under different insulating oils are compared. It is found that the cellulose cleavage in insulating paper is divided into three ways: glycosidic bond breaking, pyran ring opening and dehydroxylation. The number of hydrogen bonds, binding energy and electrostatic energy between insulating paper and vegetable oil are higher than those of mineral oil. It proves that there is a stronger interaction between insulating paper and vegetable oil. Finally, the change rules of characteristic products CO, H <sub xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">2</sub> O, H <sub xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">2</sub> and formic acid are counted. It is found that vegetable oil can delay the deterioration and prolong the life of insulating paper compared to mineral oil. The above study reveals the microscopic influence law of vegetable oil and mineral oil on the degradation of insulating paper. It provides theoretical support for the large-scale application of vegetable oil in oil-immersed transformers.