Against the backdrop of profound changes in the global economic landscape, trade in services, as an essential component of international trade, plays a critical role in promoting economic growth, upgrading industrial structures, and enhancing international competitiveness. However, China and most Belt and Road Initiative (BRI) participating countries face a relatively small scale of trade in services and an imperative need for structural optimization and competitiveness enhancement. Existing literature on trade in services among BRI countries is relatively sparse and lacks a systematic analytical framework to analyze both the expansion and upgrading of this trade. Thus, the impact of the BRI on the development of trade in services in participating countries requires in-depth investigation. This paper employed panel data on trade in services from 137 countries between 2005 and 2021, as well as panel data on the global value chains (GVCs) in service sector from 56 countries between 2007 and 2021. Using a multi-period difference-in-differences (DID) approach, it examines the effects and mechanisms through which the BRI influences the expansion (“quantity increasing”) and upgrading (“quality improving”) of trade in services among participating countries. The findings reveal that the BRI significantly expands the scale of trade in services (quantity) and enhances its quality by optimizing the trade structure, strengthening trade competitiveness, and improving trade position. Regarding the mechanisms, trade liberalization is the key pathway for expanding the scale of trade in services, while improvements in digital infrastructure, advancements in ICT, and the expansion of two-way foreign direct investment (FDI) are primary mechanisms for enhancing the quality of trade in services. The marginal contributions of this study are threefold. First, whereas existing studies have primarily focused on the BRI’s influence on merchandise trade, direct investment, and GVC positions of participating countries, this paper innovatively shifts attention to the expansion and upgrading of trade in services, achieving marginal innovation by refining and deepening the research object. Second, regarding the analytical framework for service trade quality, this study develops a more comprehensive and targeted evaluation system. It systematically characterizes quality across three dimensions: the share of digital services trade (structure), the competitiveness of digital services trade (efficiency), and the GVC upstreamness of the service sector (trade position). This framework provides a new perspective for in-depth analysis of the BRI’s impact on the development of trade in services. Third, this study investigates the mechanisms and heterogeneous effects through which the BRI promotes the expansion and upgrading of trade in services in participating countries. Based on this, it proposes targeted policy recommendations, providing a theoretical foundation for advancing high-quality BRI cooperation and fostering a new pattern of high-level opening-up.