Due to the long design cycle of watercolor cultural and creative products, a design method based on style transfer algorithm is proposed. Here, the design of Shanghai style watercolor painting cultural and creative products is taken as the research object, VGG-19 network is used as the style transfer model, and the loss function of style transfer algorithm is designed. The simulation results show that the proposed method can effectively extract and reconstruct the color, texture, brushstroke, and other styles of Shanghai style watercolor painting. The generated new images are added as design elements, which makes the cultural and creative products have both appearance and personalization. In addition, the newly generated cultural and creative products have also obtained high satisfaction from experts and users, which meet the aesthetic changes. It can be seen that proposed method provides a new idea for the design of watercolor cultural and creative products, which shortens the product design cycle, reduces the design cost, and has a certain practicality.