Estimating the biomass of Phragmites australis (Cav.) Trin. ex Steud., i.e., a common wetland macrophyte, and the associated carbon sequestration capacity has attracted increasing attention. Hanshiqiao Wetland Nature Reserve (HWNR) is a large P. australis wetland in Beijing, China, and provides an ideal case study site for such purpose in an urban setting. In this study, an existing P. australis growth dynamics model was adapted to estimate the plant biomass, which was in turn converted to the associated carbon sequestration capacity in the HWNR throughout a typical year. To account for local differences, the modeling parameters were calibrated against the above-ground biomass (AGB) of P. australis retrieved from hyperspectral images of the study site. We also analyzed the sensitivity of the modeling parameters and the influence of environmental factors, particularly the nutrient availability, on the growth dynamics and carbon sequestration capacity of P. australis. Our results show that the maximum AGB and below-ground biomass (BGB) of P. australis in the HWNR are 2.93 × 103 and 2.49 × 103 g m−2, respectively, which are higher than the reported level from nearby sites with similar latitudes, presumably due to the relatively high nutrient availability and more suitable inundation conditions in the HWNR. The annual carbon sequestration capacity of P. australis in the HWNR was estimated to be 2040.73 gC m−2 yr−1, which was also found to be highly dependent on nutrient availability, with a 50% increase (decrease) in the constant of the nutrient availability KNP, resulting in a 12% increase (23% decrease) in the annual carbon sequestration capacity. This implies that a comprehensive management of urban wetlands that often encounter eutrophication problems to synergize the effects of nutrient control and carbon sequestration is worth considering in future practices.