Abstract: The digital economy is an important driving force to promote urban low-carbon transformation, and it is also a key path to achieve the goal of carbon peaking and carbon neutrality. This study takes 276 cities at prefecture level and above in China as the research object, uses the improved entropy method to measure the development level of the digital economy in each city, and divides the carbon emission performance into carbon emission intensity and carbon emission efficiency. On the basis, the panel fixed effect model and mediation effect model are comprehensively used to analyze the impact of digital economy on carbon emission performance and its mechanism. The results show that: (1) For every 1% increase in the development level of digital economy, carbon emission intensity will be significantly reduced by 0.180%, and carbon emission efficiency will be significantly increased by 0.276%, that is, digital economy can significantly improve the carbon emission performance. (2) The impact of digital economy on carbon emission performance is heterogeneous in city location and city size, and the effect of digital economy is greater in the eastern cities and megacities. (3) Digital economy can significantly enhance carbon emission performance by raising the level of economic development, optimizing industrial structure and accelerating technological innovation. The research shows that the digital economy can not only significantly boost carbon emission performance directly, but also indirectly affect carbon emission performance through scale effect, structure effect and technology effect. Therefore, it is still necessary to expedite the high-quality development of digital economy, especially to strengthen the transmission effect of technological innovation and industrial upgrading on carbon emission performance. At the same time, a differentiated carbon emission reduction mechanism needs to be established and improved based on city size and resource endowment.