Many cities worldwide face decline due to mineral-resource exhaustion, with mining-induced subsidence and land degradation posing urgent land use challenges. At the same time, carbon neutrality has become a global agenda, promoting ecological restoration, emissions reduction, and green transformation in resource-exhausted cities. However, empirical evidence on how carbon neutrality strategies drive land use transition remains scarce. Taking Xuzhou, China, as a case study, we integrate the GeoSOS–FLUS land use simulation model with a Markov chain model to project land use patterns in 2030 under three scenarios: natural development (ND), land recovery (LR), and carbon neutrality (CN). Using emission factors and a land use carbon inventory, we quantify spatial distributions and temporal shifts in carbon emission and sequestration. Results show that LR’s rigid recovery policies restrict broader transitions, while the CN scenario effectively reshapes land use by enhancing the competitiveness of low-carbon types such as forests and new-energy land. Under CN, built-up land expansion is curbed, forests and new-energy land are maximized, and emissions fall by 4.95% from 2020. Carbon neutrality offers opportunities for industrial renewal and ecological restoration in resource-exhausted cities, steering transformations toward approaches that balance ecological function and carbon benefits. Long-term monitoring is required to evaluate policy sustainability and effectiveness.