Based on the provincial (including municipalities and autonomous regions) panel data from 2005 to 2019, the influence of policy-supported agricultural insurance on agricultural carbon emission reduction has been exploded by constructing a time-varying difference-in-differences model from pilot project of policy-supported agricultural insurance. The research shows that policy-supported agricultural insurance has an obvious inhibitory effect on carbon emission in the pilot districts. The result still remains after various tests such as the parallel trend test, the instrumental variable method, and the placebo test. Further study shows that the specialization of production and the progress of agricultural technology are the main ways to restrain agricultural carbon emission by policy-supported agricultural insurance. Although expansion of the operation scale contributes to agricultural carbon emission reduction, policy-supported agricultural insurance could not significantly promote operation scale expansion. Compared with other regions, the effect of policy-supported agricultural insurance on carbon reduction is more obvious in the main grain-producing areas and eastern regions.