Earlier studies have confirmed that the addition of CO2 to a diffusion flame suppresses the formation of soot. However, a consensus has not been reached on the fundamental mechanisms of the suppression. In this paper, the influence of CO2 addition on soot formation in an ethylene/air diffusion flame is investigated by numerical simulation, with focus on the fundamental mechanism of the suppression effect on soot formation. A special strategy is employed to separate the chemical effect from the thermal and dilution effects. The simulation results confirm that the addition of CO2 suppresses soot formation through not only the thermal and dilution effects, but also the chemical effect. The chemical effect of CO2 addition is primarily caused by the reduced concentration of radical H due to the reaction CO+OHCO2+H, which suppresses the soot inception and surface growth rate. The chemical effect of CO2 addition has negligible effect on soot oxidation process.