To develop new agents against strawberry grey mould and to aid in the development of biological pesticides, we investigated the inhibitory effect of a natural compound, phenazine-1-carboxamide (PCN), against Botrytis cinerea using a growth rate assay. Additionally, indoor toxicity and the in vitro control effect of PCN were further studied to determine its potential mechanisms of action on B. cinerea. PCN was inhibitory against B. cinerea with a 50% effective concentration (EC50) of 108.12 μg/mL; the toxicity of PCN was equivalent to that of carbendazim (CBM). The best in vitro control effect of PCN against grey mould in strawberry (fruit) reached 75.32%, which was slightly higher than that of CBM. The field control effect of PCN against grey mould reached a maximum of 72.31% at a PCN concentration of 700 μg/mL, which was 1.02 times higher than that of CBM. Fungistatic activity was observed at low concentrations of PCN, while high concentrations of PCN resulted in fungicidal activity against B. cinerea. This natural compound strongly inhibited both spore and sclerotium germination of B. cinerea, with the best relative inhibition rates of 77.03% and 82.11%, respectively. The inhibitory effect of PCN on mycelial growth of B. cinerea was significant and reached levels of 87.32%. Scanning electron microscopy observations revealed that after 48 h of PCN treatment, the mycelia appeared loose, locally twisted, and folded, with exudation of contents; the mycelia was withered and twisted, with edge burrs, deformations, ruptures and a sheet-like structure. Transmission electron microscopy observations revealed that after 48 h of PCN treatment, the structure of the cell nucleus was unclear and the vacuoles had ruptured; additionally, various organelles exhibited disordered structures, there were substantial non-membrane transparent inclusions, the cells were plasmolysed, the cell walls were collapsed in some cases, and the hyphal tissue was essentially necrotic. A PCN dosage of 35–140 μg/mL had no effect on the cell membrane permeability of the mycelia, while a PCN dosage of 700 μg/mL resulted in significant permeability. PCN inhibited B. cinerea toxin; the mycotoxin level was approximately 0.41 of the value recorded for the control at a PCN dosage of 700 μg/mL. PCN affected the activity of pectin methylgalacturonase (PMG), polygalacturonase (PG), cellulase (Cx) and β-glucosidase (BG); the lowest activities of PMG, PG, BG and Cx reached 0.3 U/mg, 0.62 U/mg, 0.64 U/mg, and 0.79 U/mg, respectively, after treatment with 700 μg/mL PCN.