From 8pm on Friday, half of Beijing's private cars will be ordered off the road, with an odd-even number plate system in force, according to a notice posted on the official website of the Beijing municipal government.
Construction sites will be closed, and some industrial plants and enterprises will limit or stop production, the notice added.
The alert came on a rare blue sky day in the city.
"Enterprises and public institutions can adjust office time or ask employees to telecommute," the notice said.
"Kindergartens, primary and middle schools can work on flexible teaching schedules or close."
A red alert, issued when severe smog is expected to last more than 72 hours, is the highest of Beijing's four-tiered, colour-coded warning system.
The capital issued its first ever red alert last year in December since the adoption of an emergency response programme for air pollution in 2013, despite frequent bouts of serious smog.
Most of China's greenhouse gas emissions come from the burning of coal for electricity and heating, which spikes when demand peaks in winter and is the main cause of smog.
The issue is a source of enduring public anger in China, which has seen fast economic growth in recent decades but at the cost of widespread environmental problems.