This paper aims to explore the determinants of CO₂ emissions in Laos by accounting for the significant role played by foreign direct investment (FDI) in influencing CO₂ emissions during the period 1990–2017. We apply a Johansen co-integration testing approach to investigate the presence of co-integration, and the empirical findings underscore the presence of a long-run co-integration relationship between CO₂ emissions, FDI, per capita GDP, and industrial structure. We also employ an error-correcting model to examine the short-term dynamic effect of FDI on CO₂ emissions. The empirical results show that FDI has a significant short-term dynamic effect on changes in CO₂ emissions, indicating that the relationship between FDI and CO₂ emissions is an inverted U-shaped curve. This is a validation of the EKC. Changes of FDI, per capita GDP, and industrial structure increase CO₂ emissions. Based on the analysis results, this paper puts forward policy suggestions emphasizing the need for both Laotian policymakers and Chinese investors to improve eco-environmental quality.