Eucalyptus grandis (E. grandis) has been reported to form a symbiosis with arbuscular mycorrhizal fungi (AMF), which plays an important role in improving plant tolerance of heavy metal. However, the mechanism of how AMF intercept and transport cadmium (Cd) at the subcellular level in E. grandis still remains to be researched. In this study, a pot experiment was conducted to investigate the growth performance of E. grandis under Cd stress and Cd absorption resistance of AMF and explored the Cd localization in the root by using transmission electron microscopy and energy dispersive X-ray spectroscopy. The results showed that AMF colonization could enhance plant growth and photosynthetic efficiency of E. grandis and reduce the translocation factor of Cd under Cd stress. After being treated with 50, 150, 300, and 500 μM Cd, the translocation factor of Cd in E. grandis with AMF colonization decreased by 56.41%, 62.89%, 66.67%, and 42.79%, respectively. However, the mycorrhizal efficiency was significant only at low Cd concentrations (50, 150, and 300 μM). Under 500 μM Cd concentration condition, the colonization of AMF in roots decreased, and the alleviating effect of AMF was not significant. Ultrastructural observations showed that Cd is abundant in regular lumps and strips in the cross-section of E. grandis root cell. AMF protected plant cells by retaining Cd in the fungal structure. Our results suggested that AMF alleviated Cd toxicity by regulating plant physiology and altering the distribution of Cd in different cell sites.