With smog reducing visibility, people traveled in vehicles with their headlights on because of the haze on the road.
Residents out for morning walks said they were experiencing breathing issues.
The Air Quality Index (AQI) in the city stood at 318 on a scale of 500, indicating "hazardous" air quality, according to data from the US embassy.
Pollution in the Indian capital had almost disappeared earlier this year when the government imposed a nationwide lockdown to contain the coronavirus but has returned since the government began lifting restrictions at the end of August and farmers burning off stubble in Delhi's neighboring states.
Pollution has also been worsened by increased traffic as people go out to shop and visit relatives ahead of Diwali, one of the most important festivals for Hindus.
In a bid to curb pollution, authorities have banned the sale and use of firecrackers ahead of the Diwali festival in New Delhi, but environmentalists have called on the government to do more.