In this paper, based on the oxy-fuel and dry product cycle combustion as an application background, using the CoFlame laminar flame procedures, we simulated numerically the effects of oxygen concentration on flame structure, temperature field, soot volume fraction field and soot formation process in a two-dimensional axisymmetric C2H4 diffusion flame for an oxygen concentration of O2–CO2 atmosphere of 21%, 30%, 40% and 50%, respectively. The results showed that the flame height was decreased and the peaks of flame temperature, polycyclic aromatic hydrocarbons (PAHs) concentration and soot nucleation rate proved a logarithmic growth trend with an increase in oxygen concentration of O2–CO2 oxidizing agent. For the soot volume fraction maximum (fVmax), soot surface growth rate and soot oxidation rate showed an exponential growth trend because the leading role was the enhancement of the PAHs concentration, the soot nucleation rate and the soot surface growth rate. While the soot oxidation rate was also enhanced obviously, it was smaller than the soot surface growth rate in the soot surface growth area.