A numerical study of the chemical effects of carbon dioxide addition on both the fuel side and the oxidizer side of a diffusion flame was conducted in an attempt to explore the chemistry mechanism of the experimentally observed soot suppression by carbon dioxide addition, The laminar ethylene diffusion flame established in a counterflow configuration was considered by using detailed chemistry and transport properties. A novel strategy was developed that is able to isolate the chemical effects of a species added on either the fuel or the oxidizer side. Numerical results show that carbon dioxide, added either on the fuel side or the oxidizer side, indeed participates in chemical reactions. The specific aspects of the chemical effects of carbon dioxide addition that have direct implications for chemical suppression of soot formation are reduced concentration of acetylene and flame temperature and conversion of carbon dioxide by hydrogen atom to hydroxyl which prompts oxidation of soot precursors in the soot formation region. Reactions CO2+H --> CO+OH and CO2+CH --> HCO+CO were found to be responsible far the chemical effects of carbon dioxide addition. The chemical effects of CO, addition on the fuel side are small but becomes significant when introduced on the oxidizer ride. The chemical effects of CO2 addition were also found to suppress NOx formation.