Experimental and numerical modeling studies have been performed to investigate the effect of CO2 dilution on soot formation in ethylene counterflow diffusion flames. Thermal and chemical effects of CO2 addition on soot growth was numerically identified by using a fictitious CO2 species, which was treated as inert in terms of chemical reactions. The results showed that CO2 addition reduces soot formation both thermodynamically and chemically. In terms of chemical effect, the addition of CO2 decreases soot formation through various pathways, including: (1) reduced soot precursor (PAH) formation leading to lower inception rates and soot number density, which in turn results in lower surface area for soot mass addition; (2) reduced H, CH3, and C3H3 concentrations causing lower H abstraction rate and therefore less active site per surface area for soot growth; and (3) reduced C2H2 mole fraction and thus a slower C2H2 mass addition rate. In addition, the sooting limits were also measured for ethylene counterflow flames in both N-2 and CO2 atmosphere and the results showed that sooting region was significantly reduced in the CO2 case compared to the N-2 case.