Orthogonal testing method was used to study the effects of fly ash, aggregate, weight ratio of water and material, way of incorporation of hydrophobic agent, on dry density, compressive strength, water absorption and softening coefficient of composite insulation mortar. The optimal ratio was obtained as 15% of the total weight is fly ash, 40% of the weight are aggregate, weight ratio of water and material are 1.1, 0.2% is hydrophobic agent (hydrophobic agent was added in the mixture). The main performances of the mortar were recorded as dry density was 220Kg/m3, compressive strength after 28 days was 0.50MPa, and thermal conductivity 0.0593W/(m•K). Microstructure of the composite insulation mortar was analyzed by SEM (scanning electron microscopy) and its function mechanism was studied preliminarily.