Organic matter found in early Martian sediment may yield clues to the planet’s environmental conditions, prebiotic chemistry and habitability, but its origin remains unclear. Strong 13C depletion in sedimentary organic matter at Gale crater was recently detected by the Curiosity rover. Although this enigmatic depletion remains debated, if correct, a mechanism to cause such strong 13C depletion is required. Here we show from CO2 photolysis experiments and theoretical considerations that solar ultraviolet photolysis of CO2 in a reducing atmosphere can yield strongly 13C-depleted CO. We suggest that atmospheric synthesis of organic compounds from photolysis-produced CO is a plausible mechanism to explain the source of isotopically depleted organic matter in early Martian sediments. Furthermore, this mechanism could explain 13C enrichment of early Martian CO2 without requiring long-term carbon escape into space. A mass balance model calculation using our estimated isotopic fractionation factor indicates the conversion of approximately 20% of volcanic CO2 emissions on early Mars into organics via CO, consistent with the available data for carbon isotopes of carbonate. Although alternative pathways for organic compound production have been proposed, our findings suggest that considerable amounts of organic matter may have been synthesized from CO in a reducing early Martian atmosphere and deposited in sediments.