From Thursday, between 0530 GMT and 2000 GMT, 'vehicles with even-number registration plates will be allowed to drive around on even-number days and cars with odd-number registration plates on odd-number days,' the city hall said in a statement.
In a first in Spain, the country's capital banned half of its private cars in a fight against pollution on Wednesday.
Madrid's city hall announced that from Thursday, between 0530 GMT and 2000 GMT, "vehicles with even-number registration plates will be allowed to drive around on even-number days and cars with odd-number registration plates on odd-number days".
Exceptions to the ban include mopeds, hybrid cars and those carrying three people or more or used by disabled people. Buses, taxis and emergency vehicles are also exempt.
Depending on pollution levels, the decision will be revised daily.
It is activated when levels of harmful nitrogen dioxide in the atmosphere go above 200 microgrammes per cubic metre in at least two measuring stations for two days running, and if the air is unlikely to clear imminently, AFP reported.
Madrid, home to 3.2 million residents and some 1.8 million cars, often suffers from bouts of pollution.
The measure prompted criticism from the conservative Popular Party (PP) which conservative Popular Party (PP).
"It's not about traffic restrictions but about the important issue of public health," deputy Mayor Marta Higueras told reporters. "Lots of people suffer from breathing problems and are very affected by pollution."
Former PP mayor Ana Botella implemented the anti-pollution measures in May last year.