Soil is the largest organic carbon reservoir in terrestrial ecosystems. It serves as both a carbon source and a carbon sink and plays a critical role in achieving carbon neutrality goals. Biochar, a carbon-rich material, is produced by thermally cracking waste biomass or organic matter under oxygen-limited conditions. Due to its significant carbon sequestration effects and stability, biochar has become an important technical tool for improving and sequestering soil carbon. This review systematically elucidates the mechanisms of soil carbon sequestration mediated by biochar. It focuses on how the characteristics of the raw material (source, composition, and structure), the parameters of its preparation (pyrolysis temperature), and the conditions of its application (dose and duration of action) influence the efficacy of soil carbon sequestration. The review also analyzes the regulatory effects of environmental factors, such as nitrogen addition/deposition, temperature gradients, and soil texture, on biochar-mediated soil carbon sequestration. Based on the current state of research, future studies should focus on the dynamic response mechanisms of subsoil carbon pools, the evolution patterns of carbon stability under long-term application, and the interactive effects between biochar and inorganic carbon pools. This will provide the necessary theoretical support for developing a carbon-neutral application system based on biochar technology.