The carbonation of steel slag for the production of building materials is an effective solution to the storage issues associated with steel slag. This study addressed the challenges of existing steel slag carbonation processes, such as prolonged carbonation time and low calcium conversion rate, by developing a novel suspended state steel slag powder carbonation device. The optimal process parameters for suspended state carbon fixation under low water-solid ratio were investigated. The results indicate that the optimal carbonation reaction parameters are: air velocity of 11 m/s, CO2 concentration of 90% (volume fraction), and water-solid ratio of 0.10. Under these conditions, after 240 s of carbonation of steel slag powder, the CO2 uptake reaches 4.85%, and the Ca conversion rate is 17.32%. The carbonation activity of steel slag is relatively high, with the primary carbonation product being calcite (CaCO3). An increase in carbonation time leads to a reduction in the heat release during the hydration of the carbonated steel slag. The inhibitory effect of steel slag on the early hydration of cement is significant, but carbonation can notably improve this inhibitory effect. The suspended state carbonation process offers advantages of shorter carbonation time and higher calcium conversion rate. This technology aids steelmaking enterprises in achieving resource utilization of steel slag and reducing carbon emissions, providing a reference for the optimization of steel slag carbonation processes.