Based on policy instrument theory and a case of low-carbon city development (Qihe County in Shandong), this study examined the policy instruments adopted for low-carbon city development in China and the effectiveness of these instruments. All the policies adopted by the piloted city from 2008 and 2014 were collected, coded, and analyzed. A two-dimensional analytical framework was developed based on a trichotomous policy instrument categorization and low-carbon city connotation. The results showed that the key goal of China’s low-carbon city construction is to develop low-carbon technology and low-carbon energy. Compulsory policy instruments are the most used and most effective, while voluntary policy instruments are rarely used. Further results indicated that when the ratio of compulsory instruments and mixed instruments comes to 2:1, the combination of policy instruments can lead to the optimal completion degree. It seems difficult to balance the stability of various policy instruments with the overall high completion degree. Chinese local governments are more accustomed to compulsory policy instruments. This reminds policymakers to pay more attention to the potential of voluntary instruments and mixed instruments in building low-carbon cities.