The building sector plays a pivotal role in climate change mitigation. By regulating the demand for services and products from supply sectors, building sector can contribute to decarbonization. To assess the decarbonization and cost-saving potential of demand-side solutions for China’s residential building sector, this study develops a demand-side solution framework and an end-use technology model. The model covers the building sector and major supply sectors, considering the heterogeneous impacts of demand-side solution measures on different supply sectors. Here we show that the most optimistic cost-effective demand-side solution can reduce cumulative CO₂ emissions by 47% (42.21 Gt CO₂-eq), while achieving a 16% saving in the net present value of costs over the period 2020−2060. Additionally, results indicate that the demand-side solution enable China’s rural residential buildings to achieve carbon neutrality without carbon dioxide remove options, while simultaneously mitigating uncertainties in reaching carbon neutrality targets.