The invention discloses functionalized chilli sauce with reduced spicy and a production method of the functionalized chilli sauce. The functionalized chilli sauce is obtained by the steps that green red pepper, corn and anise are cleaned and ground, then table salt and saccharose are added for mixing and fermentation, and then an obtained fermentation production is mixed with thick broad-bean sauce, functional organic acid and water and fried evenly. According to the functionalized chilli sauce, a proper amount of the functional organic acid with moderate acidity is added into the chilli sauce, the spicy degree can be decreased, and the nutrition and flavor of the chilli sauce can be improved.