The orange level, the second highest, advises schools and nurseries to cancel outside sports classes but falls short of ordering them to close and keeping government vehicles off the road, provisions that come into force with the "red" level.
The alert was raised after the Beijing government faced criticism from state media and online for failing to act against high pollution levels last weekend.
The city dispatched inspectors to factories around the capital yesterday, warning those found breaching emission rules would be fined.
The capital was already shrouded in smoky, white smog by the afternoon and the authorities urged residents to leave cars at home.
Some residents welcomed the announcement but others asked why more was not being done.