Abstract: Purpose/Significance Excessive emissions of greenhouse gases have caused great harm to the global environment. To maintain the sustainable development of the economy and society, countries have actively promoted the carbon cap-and-trade mechanism. At the same time, scholars have carried out extensive researches on the carbon cap-and-trade mechanism through empirical evidence, models and other paradigms, but there is still a lack of literature review of the carbon cap-and-trade mechanism. In view of this, this paper reviews and analyzes the carbon cap-and-trade mechanism, which will enrich the research of the carbon cap-and-trade mechanism and provide a reference for the operation of the carbon trading market. Design/Methodology By means of literature review, this paper discusses both the macro and the micro perspectives. The macro perspective includes the regional level and the industry level, while the micro perspective mainly refers to the enterprise operation level. Literatures are classified, summarized and analyzed according to the research objects. Conclusions/Findings Through descriptive analysis and review of 107 literatures in the field of carbon cap-and-trade mechanism, prospects are made from the following four aspects: first, the study of the carbon price in carbon cap-and-trade mechanism; second, the influence of carbon cap-and-trade mechanism on supply chain; third, research on various carbon emission reduction policies; fourth, research on carbon emission reduction technologies in carbon cap-and-trade mechanism.