This study aims to analyze the effectiveness of the compressed natural gas (CNG) bus program on air quality in seven metropolitan cities in Korea. Two hundred and fifty-nine cases from monthly panel data covering June 2005 to June 2008 were analyzed. Natural and sociological characteristics in each city were included as control variables. The Chinese Air Pollution Index was also considered based on previous studies demonstrating that air quality in Korea is adversely affected by transboundary pollution from China. The relationship between five air pollutants (SO 2 , NO 2 , O 3 , CO, and PM 10 ) and the CNG bus ratio was analyzed by panel data analysis. The key findings are as follows. CO and PM 10 significantly decrease with an increase in the CNG bus ratio. On the other hand, SO 2 and NO 2 demonstrate no statistically significant relationship with CNG bus ratio, while O 3 appears to have a slightly positive relationship. In addition, the results indicate that air pollution from China contributes to the increase in PM 10 and O 3 in Korea approximately at the threshold of 100 in Chinese Air Pollution Index. Even though introducing CNG buses can reduce the level of PM 10 , it might be also increased due to the pollutants from China.