Calcium carbide is produced industrially in an electric arc furnace from a mixture of lime and coke at approximately 2200 °C. This method has not changed since its invention in 1892:

CaO + 3 C → CaC2 + CO

The high temperature required for this reaction is not practically achievable by traditional combustion, so the reaction is performed in an electric arc furnace with graphite electrodes. The carbide product produced generally contains around 80% calcium carbide by weight. The carbide is crushed to produce small lumps that can range from a few mm up to 50 mm. The impurities are concentrated in the finer fractions. The CaC2 content of the product is assayed by measuring the amount of acetylene produced on hydrolysis. As an example, the British and German standards for the content of the coarser fractions are 295 L/kg and 300 L/kg respectively (at 101 kPa pressure and 20 °C temperature). Impurities present in the carbide include phosphide, which produces phosphine when hydrolysed.

This reaction was an important part of the industrial revolution in chemistry, and was made possible in the USA as a result of massive amounts of inexpensive hydroelectric power produced at Niagara Falls before the turn of the 20th century.

The method for the production in an electric arc furnace was discovered in 1892 by T. L Willson and independently by H. Moissan in the same year.