This study investigates the impact of income generated from natural resources on environmental sustainability and analyses the moderating role of institutional quality in carbon emissions function. An extensive dataset from 61 developing nations covering the years 2000-2018 has been taken, which uses a dynamic heterogeneous panel data model. Our study follows a rigorous methodology by applying the pooled mean group estimator. An extensive examination of the impacts over the short run and long run is possible using this method. This study reveals multifaceted findings: in the short run, the effect of institutional quality and natural resources revenues on carbon emissions is insignificant, implying that such factors have a relatively minor impact. The long-term examination reveals that income derived from natural resources causes a spike in carbon emissions, which causes environmental deterioration and climate change. Strong institutional quality can significantly mitigate the adverse effects of correlation between revenues from natural resources and carbon emissions, which have been observed. The study's moderating effect of natural resources richness, which gradually reduces institutional quality's ability to reduce carbon emissions, is a crucial finding. Our study significantly advances the field of environmental economics, especially when discussing sustainable development in emerging nations with abundant natural resources. It emphasizes the delicate balance that must be struck between preserving efficient environmental governance and maximizing the richness of natural resources. Our findings underscore the crucial need for developing nations to strengthen their institutional frameworks and capacities and have substantial policy implications. These steps are essential to ensuring that the use of natural resources is in line with environmental sustainability objectives, turning resource curses into blessings for long-term development and environmental preservation. This research opens the door to sector-specific impacts and personalized policy interventions in resource-rich developing economies.