Pinus yunnanensis is an important component of China’s economic development and forest ecosystems. The growth of P. yunnanensis seedlings experienced a slow growth phase, which led to a long seedling cultivation period. However, asexual reproduction can ensure the stable inheritance of the superior traits of the mother tree and also shorten the breeding cycle. The quantity and quality of branching significantly impact the cutting reproduction of P. yunnanensis, and a shaded environment affects lateral branching growth, development, and photosynthesis. Nonetheless, the physiological characteristics and the level of the transcriptome that underlie the growth of lateral branches of P. yunnanensis under shade conditions are still unclear. In our experiment, we subjected annual P. yunnanensis seedlings to varying shade intensities (0%, 25%, 50%, 75%) and studied the effects of shading on growth, physiological and biochemical changes, and gene expression in branching. Results from this study show that shading reduces biomass production by inhibiting the branching ability of P. yunnanensis seedlings. Due to the regulatory and protective roles of osmotically active substances against environmental stress, the contents of soluble sugars, soluble proteins, photosynthetic pigments, and enzyme activities exhibit varying responses to different shading treatments. Under shading treatment, the contents of phytohormones were altered. Additionally, genes associated with phytohormone signaling and photosynthetic pathways exhibited differential expression. This study established a theoretical foundation for shading regulation of P. yunnanensis lateral branch growth and provides scientific evidence for the management of cutting orchards.