More than 300,000 vehicles will be decommissioned in the capital Beijing.
Recent findings from the state's environmental agency showed that 31% of the air pollution in Beijing comes from vehicle exhaust fumes.
Next year, the government plans to scrap up to five million vehicles from other regions.
The action plan, aimed at strengthening control on vehicle emissions, "will be a major agenda item for the country's energy savings, emissions reductions, and low-carbon development during the next two years".
That is according to a statement on the government's web portal.
Fighting pollution has emerged as a priority for China's leaders as they try to reverse damage done by decades of manufacturing-driven growth, which has sacrificed the nation's air, water and soil qualities.
The state council did not offer details on how the latest plan will be implemented.
But in Beijing, the municipal government has previously offered subsidies to car owners to voluntarily turn in their ageing vehicles to be scrapped.
In addition to removing vehicles which contribute to air pollution, experts are calling for quality upgrades in fuels, which can also help mitigate air pollution and smog.
After years of denying the issue existed, the central government earlier this year accepted that pollution was of genuine concern.
It now publishes figures for the air quality in China's major cities, and in 2013 promised $275bn (Â£163bn) to tackle the issue in the next five years, setting targets for air quality improvements.
China plans to remove six million vehicles that do not meet exhaust emission standards by the end of the year as a way of improving air quality.