In this work, the mechanisms of CO₂-assisted steam flooding in ultra-heavy oil reservoir development are discussed. One-dimensional models are established to simulate the reservoirs, and the development characteristics of CO₂-assisted steam flooding are studied. The feasibility of this development method in carbon sequestration is verified by analyzing the produced oil components. Subsequently, two-dimensional models are used to create the visual reservoir profiles, observe the fluid distribution in the reservoir, and analyze the influence of CO₂ on the steam heat transfer. The results show that the steam sweep efficiency of steam flooding is poor due to the unsatisfactory displacement mobility ratio, heat loss and channeling. The oil recovery is below 50%. However, during CO₂-assisted steam flooding, the recovery factor is increased to about 60%. The injected CO₂ is expanded by heat, pushing steam deeper into the reservoir. It dissolves in oil to form foam, which alleviates channeling while optimizing steam sweep efficiency. In addition, CO₂ can indirectly separate heavy components from oil to reduce its viscosity and improve displacement mobility ratio. Meanwhile, it can reduce the thermal conductivity and the condensation heat transfer coefficient of the medium, reduce the steam heat loss, which allows more heat to travel deeper into the formation. Part of the injected CO₂ is stored in the reservoir, with a proportion of 14.39%-17.12%, indicating the potential of CO₂-assisted steam flooding in carbon sequestration. Based on the wide source and low cost of CO₂, it has advantages in waste gas utilization and heavy oil reservoir development.