<p>There is a growing global consensus on the need to address climate change and improve environmental quality through the implementation of low-carbon intervention policies aimed at mitigating carbon emissions. However, much of the existing literature has neglected the potential spillover effects of such policies on pollution control in neighboring areas, as well as the extent and trend of such spillover effects. This study examines not only the local effect of China’s low-carbon city pilot policy (LCCPP) on environmental pollution—along with its underlying mechanisms and heterogeneity—using the difference-in-differences (DID) method, but also the spillover effect—including their extent and trend—on neighboring areas using the spatial DID method. The results show that the LCCPP significantly reduces environmental pollution in pilot cities and also contributes to pollution reduction in neighboring cities. Moreover, the spatial spillover effect of LCCPP varies with spatial distance. The mechanism analysis reveals that the proactive government mitigates environmental pollution through the regulatory role of fiscal expenditures, while an efficient market contributes via the innovation compensation mechanism. Furthermore, the effects of the LCCPP on environmental pollution are more pronounced in cities located south of and along the Hu Line, in second-tier and above-tier cities, and in non-resource-based cities. This study provides empirical insights for developing countries like China to leverage low-carbon intervention policies for pollution reduction and to formulate differentiated policies tailored to specific urban characteristics.</p> Graphical Abstract <p></p>