With the surge in electrical loads and increasing voltage levels, the mechanical performance and thermal stability of insulating paper are facing severe challenges. However, due to the lack of direct scientific theories or simulation guidance, traditional inefficient “trial-and-error” experiments are difficult to effectively develop new types of cellulose composite insulating papers. For solving this problem, in this work we are to enhance the effects of nanoscale zinc oxide (nano-ZnO) on the mechanical and thermal properties of cellulose through molecular dynamics simulations. Initially, we model the nano-ZnO/cellulose composite material , then carry out a microscopic analysis of the mechanical performance and thermal stability of modified cellulose with varying nano-ZnO content, thus determining the optimal ratio of nano-ZnO to cellulose. The results indicate that compared with the outcomes from the unmodified model, the mechanical performance, cohesive energy density, glass transition temperature, and thermal conductivity of the nano-ZnO-modified cellulose model are all improved, with the highest increase in elastic modulus reaching 45.31% and the highest increase in thermal conductivity attaining 41.49%. The addition of nano-ZnO effectively fills the gaps in the fiber network and enhances the interactions between cellulose chains and thermal conduction channels, thereby improving the thermodynamic performance of cellulose. This work provides valuable theoretical references for rapidly preparing modified cellulose insulating papers with excellent thermodynamic performance.