This research investigates the effect of carbon sequestration via accelerated carbon curing (ACC) in alkali-activated earth-based alkali-activated mortar (25S-AAM) on the long-term engineering performance, chemical bonding and microstructure. The addition of clay accelerates hydration kinetics and promotes the formation of more cross-linked calcium–(sodium) alumino silicate hydrates (N-A-S-H and C-(N)-A-S-H). This contributes to early strength and a 25% reduction in total shrinkage after 60 days. Although ACC promotes higher carbon sequestration and increases 1-d compressive strength by 13%, it leads to severe decalcification of 25S-AAM after 365 days of natural exposure, resulting in coarsening of the pore structure in the mesoporous size range of 10–100 nm. Due to a relatively low Ca/Si ratio, 25S-AAM is more adversely affected by natural carbonation during the 365-d exposure period than the control (without clay). In summary, ACC is not recommended for earth-based AAM products especially if they are applied for outdoor constructions.