The carbon emission reduction effect of the carbon trading pilot policy has a profound impact on policy promotion and low-carbon development. This paper evaluates the emission reduction effect brought by the implementation of this policy by analyzing the panel data of 30 provincial-level regions from 2005 to 2021 and applying the DID method. The results show that the implementation of the policy significantly reduces carbon emission intensity by 13.2%, generating environmental benefits ranging from 263.68 billion yuan to 133.88 billion yuan. The analysis of the impact mechanism indicates that the emission reduction effect is mainly realized through two major paths: green technology progress and optimization of energy consumption structure. In addition, the heterogeneity analysis shows that the emission reduction effect of the policy is particularly significant in the western region, the region with more lagging economic development, and the region with stricter environmental regulation. Finally, this paper puts forward targeted policy recommendations.