Abstract: Purpose/Significance The impact mechanism and effect of ecological compensation are hot issues in existing literature research. Design/Methodology This study systematically explains the inherent mechanism of ecological compensation affecting environmental pollution, discusses the impact of the Carbon Peak and Neutrality target regulation effect. Based on the panel data of 108 cities in the Yangtze River Economic Belt from 2003 to 2019, the double difference method is used for empirical analysis. Conclusions/Findings Ecological compensation has the effect of reducing environmental pollution in the Yangtze River Economic Belt, and this impact has a lag. Heterogeneity analysis shows that the impact of ecological compensation on environmental pollution in different regions of the Yangtze River Economic Belt is heterogeneous. The analysis of the regulatory effect shows that the pollution reduction effect of the“Carbon Peak and Neutrality”target constraint on ecological compensation has a positive regulatory effect, and the robustness analysis such as the parallel trend test, the PSM-DID test, and the placebo test still exists. Further analysis shows that industrial structure adjustment is the intermediary variable of ecological compensation affecting environmental pollution under the constraint of “double carbon” target. Finally, from the implementation of low-carbon pilot and ecological compensation combination policies, policy suggestions for promoting environmental pollution control in the Yangtze River Economic Belt are put forward.