From Sunday until Thursday, drivers will be able to use their cars in a much of central Tehran only on odd or even days according to the last figure on the number plate, Esmail Ahmadi Moghaddam, Iran's police chief, said on state television.
Schools in the city of 10 million people have been shut since Tuesday and office workers were told to stay indoors for two days.
Officials also said old, run-down cars that spew more poisonous gases into the air will be banned from driving in the city.
Many of the two million-plus vehicles in the city are more than 20 years old and guzzle subsidised petrol at an alarming rate.
Private car ownership has also exploded and the public transport system does not provide adequate coverage to many parts of Tehran.
Pollution alerts are becoming increasingly common in the city, and air quality is deemed unhealthy for at least 100 days of the year.
Complaints of asthma, allergies and respiratory ailments are also on the rise.
The odd-even ban has been applied for short periods in the past years, but failed as the residents complained about the impracticality of such a scheme.