This study investigated the effect of the concentration of ambient fine particulate matter (PM2.5), a transboundary air pollutant, on the livability of neighboring areas of China and South Korea with the aim of informing common policy development. Grey relational analysis (GRA) and panel regression analysis were performed to examine the effect of PM2.5 concentration on various livability indicators. The results revealed that urban living infrastructure was an indicator of effect in both South Korea and China. Based on the high correlation between urban living infrastructure and PM2.5 concentration, it can be seen that PM2.5 clearly affects livability, shown by panel regression analysis. Other key livability indicators were traffic safety, culture and leisure, and climate indicators. Spatial analysis of the livability index revealed that from 2015 to 2019, livability improved in both South Korea and China, but there was a clear difference in the spatial distribution in China. High-vulnerability areas showed potential risks that can reduce livability in the long run. In South Korea and China, areas surrounding large cities were found to be highly vulnerable. The findings of this research can guide the establishment of policies grading PM2.5 pollution at the regional or city macro-level.