Air pollution is an increasing concern to urban residents. In response, residents are beginning to adapt their travel behaviour and to consider local air quality when choosing a home. We study implications of such behaviour for the morphology of cities and population exposure to traffic-induced air pollution. To do so, we propose a spatially explicit and integrated residential location and transport mode choice model for a city with traffic-induced air pollution. Intra-urban spatial patterns of population densities, transport mode choices, and resulting population exposure are analysed for urban settings of varying levels of health concern and air pollution information available to residents. Numerical analysis of the feedback between residential location choice and transport mode choice, and between residents' choices and the subsequent potential impact on their own health suggests that increased availability of information on spatially variable traffic-induced health concerns shifts population towards suburban areas with availability of public transport. Thus, health benefits result from reduced population densities close to urban centres in this context. To mitigate population exposure, our work highlights the need for spatially explicit information on peoples' air pollution concerns and, on this basis, spatially differentiated integrated land use and transport measures.