Poor air quality is one of the most serious environmental problems in urban areas around the world, especially in developing countries. Recent studies that assess and value the adverse health impacts of exposure to particulates reveal the magnitude of the costs to society that calls for immediate actions. The paper shows that India appears to bear a very high level of these costs by international comparison. It reviews some latest findings in quantifying the impact of exposure to particulates on mortality with a special reference to India, and discusses the issues of economic valuation of sickness and premature death due to air pollution, with the focus on developing countries. Further, the paper analyzes, drawing upon a case study of Mumbai, the relative effects of various pollution sources on the exposure levels and health outcomes, as well as the health benefits of specific control measures and policies. The concluding section highlights a set of issues and recommendations regarding a better integration of environmental health considerations into pollution management decisions.