Traffic congestion is one of the foremost problems confronted by the urban and suburban tenants of today. Traffic congestion increases vehicle emissions and degrades air quality. Urban planners and policy makers have consequently been always investigating choices to alleviate traffic congestion and to enhance air quality. Teleworking is one option that has received significant consideration and has been studied in the recent past. The aim of the study is to explore the relationship between teleworking, air quality and traffic in Switzerland. The analysis relies on panel individual and household level data over the period 2002-2013. We examine five main air pollutants; the sulphur dioxide (SO₂), the ground-level ozone (O₃) the nitrogen dioxide (NO₂), the carbon monoxide (CO) and the particulate matter less than 10 microns (PM₁₀). Based on the fixed effects estimates, teleworking reduces traffic volume by 1.9 per cent. Furthermore, the reduction observed on air pollution is higher for NO₂, CO and PM₁₀ ranging between 3.3-3.7 per cent, followed by O₃ at 2.3 per cent and SO₂ at 2.1 per cent. According to instrumental variable (IV) approach and the two stage least squares (2SLS) method, the effect is higher ranging between 2.6-4.1 per cent. The respective reduction on traffic becomes 2.7 per cent. Overall, the main concluding remark of the study is that teleworking can be a promising tool for urban planning and development, focusing at the traffic volume reduction, and the air quality improvement. Additional policy implications of teleworking and its beneficial effects for the society are further discussed.