The hygroexpansion and anisotropy of wood limit its application in construction and wood products industry. Zinc chloride–silicone oil was use to decrease the hygroscopicity and improve the dimensional stability of wood at 80 °C, 140 °C, 160 °C and 180 °C. The effects of the treatment on the dimensional stability, chemical structure, thermal degradation, morphology of wood were evaluated, and the mechanism was determined. Results indicated that the zinc chloride–silicone oil treatment at 80 °C improved the dimensional stability and decreased the hygroscopicity of wood. The tangential, radial, and volumetric swelling coefficients of the treated wood decreased by 9.7%, 33.5%, and 18.2%, respectively, relative to those of the untreated wood. Zinc chloride–silicone oil treatment also changed the chemical structure of wood by degrading the wood components and decreasing the moisture absorption groups. Moreover, zinc chloride–silicone oil treatment significantly influenced the thermal degradation of wood, as samples treated with zinc chloride–silicone oil at 140 °C, 160 °C and 180 °C presented sharp peaks around 511 °C, 501 °C and 473 °C. The control group exhibited a more common derivative thermogravimetric curve with a sharp peak at 375 °C. In addition, the silicone oil could impregnate wood, occlude moisture passage, and prevent the movement of moisture in wood. This method can be applied in building and wood industries to expand the applications of wood products.