An orthogonal design was used to study three factors—melting temperature, time, and solid-liquid ratio—and how they affected the dissolution rate of eucalyptus powder. The optimum solution conditions were 170 °C, 20 min, and a solid-liquid ratio of 1:25. Composition analysis of the residue indicated that, in the dissolving process, acid-insoluble lignin was converted into acid-soluble lignin, and a part of the lignin was degraded or modified. After dissolution, the crystalline structure of cellulose deteriorated, the relative crystallinity decreased, and the crystal form changed from type I into amorphous. Wood powder degradation occurred during dissolution, and a higher dissolution rate led to greater degradation. In a low-temperature environment below 225 °C, the residue thermal stability decreased slightly with increasing dissolution rates, but it greatly improved in a high-temperature environment of 225 to 600 °C.