To alleviate resource and environmental constraints and realize high-quality development, it is inevitable for China to reach peak carbon emissions by 2023 and carbon neutrality by 2060. This requires extensive, systematic, and profound socioeconomic reforms which are indispensable with the strong support of digital finance. The present study investigates to what extent digital finance affects carbon emission performance and the underlying mechanisms based on data about 261 cities in China from 2011 to 2021. The methods include the panel regression model, the instrumental variable method, and the mediating effect model. According to empirical results, firstly, digital finance effectively diminishes the intensity of carbon emissions, improves carbon efficiency in three dimensions, and ameliorates performance in carbon emissions. Secondly, digital finance decreases carbon emission intensity, raises carbon efficiency, and improves carbon emission performance through the innovation effect, industrial upgrading effect, and entrepreneurial effect. Thirdly, the impacts of digital finance on the performance of carbon emissions have shown remarkable discrepancies in different regions, with a better alleviation outcome in the central and eastern regions of China. Therefore, in the future, the Chinese government should vigorously boost digital finance development, continue to promote the integrated development of the real economy, financial services, and digital technologies, and keep optimizing resource allocation to facilitate peak carbon emissions and carbon neutrality.