As of the censusGR2 of 2000, there were 1,303 people, 562 households, and 370 families residing in the city. The population density was 134.9/km² (349.2/mi²). There were 790 housing units at an average density of 81.8/km² (211.7/mi²).
There were 562 households out of which 26.9% had children under the age of 18 living with them, 48.0% were married couples living together, 12.1% had a female householder with no husband present, and 34.0% were non-families. 30.6% of all households were made up of individuals and 12.3% had someone living alone who was 65 years of age or older. The average household size was 2.30 and the average family size was 2.83.
In the city the population was spread out with 23.3% under the age of 18, 7.8% from 18 to 24, 24.1% from 25 to 44, 27.5% from 45 to 64, and 17.3% who were 65 years of age or older. The median age was 41 years. For every 100 females there were 93.3 males. For every 100 females age 18 and over, there were 92.3 males.
The median income for a household in the city was $23,750, and the median income for a family was $27,955. Males had a median income of $26,719 versus $19,018 for females. The per capita income for the city was $14,677. About 14.8% of families and 19.4% of the population were below the poverty line, including 18.9% of those under age 18 and 24.2% of those age 65 or over.
For many decades, Carrabelle had the only tertiary sewage treatment facility in the State of Florida, but this may have been updated in recent years.