To reduce the spiciness of peppers, it's not enough to just remove the seeds. The true source of heat lies in the placenta, or pith, which contains most of the pepper's capsaicin.
The placenta connects to the capsaicin glands, the rib that runs through the pepper. The seeds hang off this section, so some assume plucking the seeds removes heat.
To remove the spice, start by cutting off the stem and then either slicing it in half or leaving it intact before deseeding and removing the placenta membrane using a spoon.