Abstract: The pilot policy of carbon emissions trading is an important lever for market -oriented environmental regulation, while inclusive green growth (IGG) is a sustainable development approach that aims to pursue economic growth, environmental friendliness, and social equity. Whether carbon trading can achieve inclusive green growth in the three dimensions of economy, society, and environment still needs further testing. We construct a multidimensional IGG index based on panel data from 30 provinces in China from 2007 to 2022, and use the difference in differences method to analyze the impact of carbon trading on IGG. The results show that carbon trading can significantly promote the improvement of IGG levels in pilot areas and the policy effects are gradually sustained. Foreign investment and green technology innovation constitute a key transmission path in the process of promoting IGG through carbon trading. IGG shows spatial positive correlation among provinces, and policies promote the synergistic improvement of IGG in neighboring areas through the “trickle down” effect and “polarization” effect. The results not only help to scientifically identify the causal relationship between carbon trading and IGG, but also provide useful references for promoting sustainable economic development.