The impact of the digital economy on carbon emissions has become a topic of contention due to the paucity of guiding theoretical and empirical research. This study presents a comprehensive causal mediation model based on an expanded structural equation model. Leveraging extensive big data analysis and data sourced from developing nations, this research aims to elucidate the precise impact of the digital economy on carbon emissions and unravel the underlying mechanism. The findings unequivocally demonstrate the pivotal role played by the digital economy in mitigating carbon emissions. Even after subjecting the conclusions to a battery of robustness and endogeneity tests, their validity remains intact. The mechanism analysis reveals that the digital economy effectively curbs carbon emissions through low-carbon technological innovation and industrial diversification. The disproportionate dominance of digital industrialization is a significant factor contributing to the emergence of the “Digital Economy Paradox”. Consequently, this paper not only introduces a novel analytical perspective that systematically comprehends the carbon impact of the digital economy but also presents fresh empirical evidence that advocates for the transformation and development of a low-carbon economy.