Short-term exposure to ultra-fine Black Carbon (BC) particles produced during incomplete fuel combustion of wood and fossil fuel has been linked to respiratory and cardiovascular diseases, hospitalizations and premature deaths. The goal of this research was to assess traffic-related BC in a cold climate along an urban highway and 300 m into an adjacent residential neighborhood. BC was measured with an aethalometer (MA350, Aethlabs) along the main traffic artery in geothermally heated Reykjavík, the capital of Iceland (64.135° N–21.895° W, 230,000 inhabitants). Stationary monitoring confirmed that traffic was the dominant source of roadside BC in winter, averaging 1.0 ± 1.1 µg/m3 (0.6 and 1.1 µg/m3 median and interquartile range; 28,000 vehicles/day). Inter-day variations in BC were primarily correlated to the atmospheric lapse rate and wind speed, both during stationary and mobile campaigns. During winter stills, BC levels surpassed 10 µg/m3 at intersections and built up to 5 µg/m3 during the afternoon in the residential neighborhood (adjacent to the highway with 43,000 vehicles/day). The BC penetrated deeply into the neighborhood, where the lowest concentration was 1.8 µg/m3 within 300 m. BC concentration was highly correlated to nitrogen dioxide (r > 0.8) monitored at the local Urban Traffic Monitoring site.