Artificial intelligence serves as the fundamental catalyst for a new wave of technological innovation and industrial transformation. It holds vital importance in reaching carbon reduction targets and the objectives of “carbon peak and neutrality”. This factor contributes significantly to the reduction in carbon emissions in the industrial domain. This article utilizes panel data from 30 provinces in China, covering the years 2013 to 2021, to develop an evaluation framework for assessing the progress of artificial intelligence development. Through the use of double fixed-effect models, mediation effect models, and threshold effect models, the empirical analysis examines the industrial carbon reduction effects of artificial intelligence and its operating mechanisms. Research indicates that the advancement of AI can significantly reduce carbon emission intensity within the industrial sector. This conclusion remains valid following comprehensive robustness tests. Furthermore, there exists temporal and regional variability in AI’s impact on industrial carbon reduction, particularly more pronounced after 2016 and in central and western regions. AI influences carbon emission reduction in China’s industrial sector through the advancement and optimization of industrial structures. Here, the increase in senior-level operations acts as a partial masking effect, while optimization serves as a partial mediator. The relationship between AI and industrial carbon emission intensity is non-linear, being influenced by the threshold of government intervention; minimal intervention weakens AI’s effect on carbon intensity reduction. These findings enhance our understanding of the factors influencing industrial carbon emissions and contribute to AI-related research. They also lay a solid empirical groundwork for promoting carbon emission reduction in the industrial domain via AI. Additionally, the results offer valuable insights for formulating policies aimed at the green transformation of industry.