The “orange level” alert declared on Sunday is the second highest possible, requiring factories to cut production.
On Sunday, some pollution readings in parts of the city reached about 17 times the level considered safe by the World Health Organisation.
Air pollution is a chronic health-risk for those living and working in the capital and other major Chinese cities.
China’s state media says the declaration of this orange level alert requires industrial plants to reduce or shut down production.
Building sites are not allowed to transport materials or waste and heavy-duty trucks are banned from the city’s roads.
Some reports suggest that visibility has fallen to a few hundred metres in some places.