The carbon budget of territorial space integrated natural and human processes, offering interdisciplinary advantages. Research on territorial space carbon budgets held significant practical value for allocating regional carbon emission responsibilities and developing carbon compensation schemes, while also providing a theoretical basis for low-carbon spatial optimization. Due to the complexity of territorial space carbon budget effects, a unified research paradigm had not yet emerged. This paper synthesized the research context and effect mechanisms of carbon budget in territorial space, focusing on carbon accounting, influencing factors, carbon balance and compensation, and territorial space optimization aimed at emission reduction and carbon sink enhancement. Our research found that combining carbon emission and carbon sink accounting methods for territorial space carbon budgets was the mainstream approach. Remote sensing monitoring and IPCC-based carbon budget inventories played an important role in carbon accounting. The territorial space carbon budget was influenced by multiple factors, including direct /indirect anthropogenic effects, natural environmental changes and ecosystem self-regulation mechanisms. Identification of carbon balance characteristics and carbon compensation research based on accounting results became key scholarly focuses. Existing studies established carbon balance/compensation zones and proposed differentiated emission reduction and carbon sequestration strategies. Additionally, the optimization of territorial spatial patterns served as a key intervention point to overcome high-carbon lock-in effects. Building on their identification of carbon budget mechanisms in territorial spaces, scholars established a comprehensive spatial optimization framework targeting emission reduction and carbon sequestration enhancement. Finally, based on the characteristics and shortcomings of existing research, this paper proposed future research directions for territorial space carbon budgets.