China is the largest producer of carbon in the world. China’s construction industry has received widespread attention in recent years due to its environmental issues. However, little research has been conducted to investigate the environmental efficiency of the domestic part of this industry. As the foreign contribution is beyond China’s control, identification of domestic carbon emissions is necessary to formulate effective policy interventions. Based on a multi-regional input‐output model, this study attempts to reduce the statistical bias associated with international trade, thereby obtaining a more accurate indicator of domestic carbon emission intensity. This study aims to reveal the change in the domestic carbon emission intensity of China’s construction industry during 2000–2014 and analyze the reason behind it. The results show that, first, both the constructed intensity indicator and commonly used measures of carbon emission intensity have exhibited a decreasing trend over the study period. However, the former has been consistently larger than the latter. Moreover, this difference first increased and then suddenly decreased after a particular year. Second, although the domestic carbon emission intensity shows a gradually declining trend, it has moved from second to first in global rankings, implying that China’s domestic construction industry’s carbon emission efficiency, while falling, lags behind other major economies. Third, the structural decomposition results reveal that changes in direct production emission intensity are the leading causes of the decline in domestic carbon emission intensity. In contrast, a change in the intermediate input structure led to an increase in the emission intensity in China’s construction industry. In addition, the enormous gaps of domestic carbon emission intensity in the construction industry between China and the selected countries are mainly attributable to the difference in the intermediate input structure. The study suggests that China’s construction industry needs to promote high value-added output, optimize intermediate input structure, and improve energy and emission efficiency.