The flexible modification of decorative veneer by plastic film is an effective method to broaden its applications. In order to understand the effect of initial veneer moisture content on the performance of plastic film reinforced decorative veneer, Fraxinus mandshurica veneers with different initial moisture contents were composited with polyethylene film. The overlaying performance of the decorative veneer and its interface morphology with MDF substrate were evaluated. The results showed that when the initial moisture content increased from 10% to 50%, the cavity proportion of PE film reinforced decorative veneer increased from 7.23% to 18.48%, while all of the minimum steel rod diameters remained at 7.6 mm. When the initial moisture content fluctuated between 10% and 20%, the optimum surface bonding strength (1 MPa) and immersion peel strength (0 mm) of the decorative veneer could be obtained. The strength of the decorative veneer significantly decreased when the initial moisture content was more than 20%, which was caused by the cavities and the poor interfacial bonding. The veneer surface was easy to crack under low moisture content conditions. Based on the overall performance and the cost of decorative wood-based panels, initial veneer moisture content was suggested to be 15% to 20%.