Carbon reduction in transportation sector is one of the core steps in China's carbon emission reduction. To begin with, 12 kinds of energy consumed in transportation industry were selected to estimate carbon emissions in China's transportation industry from 1996 to 2010 by use of the corresponding emission factor. The carbon dioxide emissions of transportation sector have increased from 195.41 megatons in 1996 to 505.73 megatons in 2010, which is basically in line with the growth of energy consumption in transportation industry. Then, by use of the scenario prediction analysis, China's future carbon emissions were predicted under three designed scenarios, namely, the baseline scenario, energy saving and low carbon scenarios. The analyses show that China's transportation carbon emissions will rise rapidly from 2011 to 2020, and then slow down around 2025. Moreover, the LYQ elastic decoupling analysis was utilized to make decoupling analysis of carbon emission of transportation. The results show that industrial emission reduction contributes most to carbon emission reduction, and industry development determines the carbon emissions of transportation industry after 2006. However, industrial energy-saving has became the most influential part on carbon reduction since 2008. It still remained weak decoupling between the industry carbon emission and GDP after offsetting the impact of other factors, thus indicating that industrial energy-saving plays an extremely important part in carbon emission reduction of China's transportation industry.