Agarwood is a secretion produced by certain trees of the Aquilaria genus in the Thymelaeaceae family after they suffer external damage. It is a mixture formed by the infiltration of various secondary metabolites, including chromones, sesquiterpenes, and resins, into the wood. Agarwood is a precious traditional medicinal material and fragrance, but the molecular mechanisms underlying its formation are not well-understood. In this study, we employed a ring-barking method to remove the bark of Aquilaria sinensis over a large area. During the bark regeneration process, agarwood substances were stably produced alongside the proliferation of secretory cells. After 35 days of implantation, an increase in secretory substances was detected in the regenerated bark. By the 50th day of formation, the ethanol extract content reached 12.9%, increasing to 19.1% by the 135th day. We further identified sesquiterpene synthesis–related genes in A. sinensis. Gene expression profile showed that the expression levels of the genes related to the 1-deoxy-D-xylulose-5-phosphate pathway gradually increased, while the expression levels of the genes related to the mevalonic acid pathway continued to decrease. After 360 days of agarwood formation, we extracted the essential oil from the regenerated cambium layer by supercritical carbon dioxide extraction. We identified 100 characteristic secondary metabolites of agarwood in essential oils through gas chromatography–mass spectrometry (GC–MS) analysis, including 27 sesquiterpenoids. In conclusion, our study provides new clues for a deeper understanding of the molecular mechanisms of agarwood formation and lays the foundation for the breeding of new agarwood varieties.