Cinnamaldehyde is one of the most effective anti-fungal and anti-aflatoxigenic plant extracts. However, the high volatility, irritating odor and instability under adverse abiotic factors restrict its direct application in food industry. Previous studies indicated that the encapsulation of essential oils with calcium alginate could protect their active compounds from environmental conditions and increase their functional capabilities. Herein, the cinnamaldehyde microcapsules (Cin-Mc) were developed on the basis of calcium alginate polymer, and its physico-chemical properties and bio-efficacies were characterized. Cinnamaldehyde was embedded in calcium alginate and the Cin-Mc was successfully made. Compared with free cinnamaldehyde, the thermal stability was enhanced, and irritating odor was decreased in Cin-Mc. Most importantly, Cin-Mc exhibited sustained release of cinnamaldehyde for 20 days at 25 °C, which leads to substantially enhanced anti-fungal and anti-aflatoxigenic effect against Aspergillus flavus during 4-month storage of unshelled peanut kernels, as compared to free cinnamaldehyde. Due to Cin-Mc's potent antioxidant and antifungal properties, stored peanuts could be effectively preserved against from lipid peroxidation and fungal contamination. Taken together, Cin-Mc displayed better application prospects in food storage than free cinnamaldehyde.