The choking pollution was caused by the "unfavourable" weather, the Ministry of Environmental Protection said. Emissions in northern China soar over winter as urban heating systems are switched on and low wind speeds have meant that polluted air has not been dispersed.
It was the first time this year that authorities have raised the orange alert, second only to red, which means heavy smog is forecast for three days, Reuters said.
The hazardous air underscores the challenge facing the government as it battles pollution caused by the coal-burning power industry and will raise questions about its ability to clean up its economy as crucial talks on a new climate change accord get under way in Paris this week.
For Beijing's 22.5 million residents, the poor air makes breathing hard.
On Monday, the air quality index in some parts of Beijing soared to 500, its highest possible level. At levels higher than 300, residents are encouraged to remain indoors, according to government guidelines.
The Beijing Environmental Protection Bureau said on Sunday that it had requested factories to limit or suspend output and had also stopped construction work throughout the city.
The ministry said the number of cities affected by heavy pollution had reached 23, stretching across 530,000 square km, an area the size of Spain, but a cold front beginning on Wednesday would see the situation improve.
State-run Xinhua news agency said more than 200 expressway toll gates in east China's Shandong province were closed on Monday due to smog. The province issued a yellow alert.
China launched a "war on pollution" last year following a spate of smog outbreaks in Beijing and surrounding regions.
China has vowed to slash coal consumption and close down polluting industrial capacity, but environmental officials admit that the country is unlikely to meet state air quality standards until at least 2030.
Reducing coal use and promoting cleaner forms of energy are set to play a crucial role in China's pledges to bring its climate warming greenhouse gas emissions to a peak by around 2030.