Background The physical inactivity pandemic not only has a negative impact on the physical and mental health of children and youth, but it is also a key contributor to the non-communicable disease (NCD) burden, particularly among low- and middle-income countries. The widespread effects of climate change, ranging from extreme weather events to worsening air quality, are exacerbating the physical inactivity pandemic, highlighting the need to undertake holistic interventions to address environmental barriers while promoting physical activity. Despite the potential benefits of active school transportation (AST) on physical activity and the environment, no study has examined the intersection between perceptions of AST, environmental perceptions, and moderate-to-vigorous physical activity (MVPA) among children and youth in India from a child and youth perspective. Methods As a part of this cross-sectional, observational study, digital survey links were administered to 1,042 children and youth aged 5 to 17 (50.3% boys; 49.7% girls). Participants were recruited from 41 schools across 28 rural and urban regions in India. Children and youth provided information on various sociodemographic factors, perceptions of crime and air pollution, and peer support factors. MVPA data were collected using an adapted version of the IPAQ short-form questionnaire. The overall sample was stratified by age, gender, and location, resulting in a total of seven multiple linear regression models to assess the association between AST and MVPA. Results Children and youth who engaged in AST were associated with higher MVPA than those who did not engage in AST (β = 18.020, 95% CI [5.890 to 30.149], p = 0.004), after adjusting for age, gender, and location. In contrast, perceptions of high crime in the neighbourhood (β = − 21.921, CI [−36.195 to −7.647], p = 0.003) and perceptions of air pollution (β = − 12.472, CI [−23.797 to −1.147], p = 0.031) were associated with lower MVPA. Moreover, having active friends was associated with higher MVPA (β = 32.391, CI [9.264 to 55.518], p = 0.006) than not having active friends. AST was significantly associated with higher MVPA in the boys, rural, and aged 13 to 17 models; however, this association was not statistically significant in the girls, urban, and aged 5 to 12 models. Conclusions These findings highlight that promoting AST can potentially promote MVPA and contribute to mitigating the NCD burden among children and youth in India. Future policies and interventions should prioritize initiatives that promote AST, considering diverse sociodemographic factors, and addressing environmental challenges such as perceptions of crime and air pollution.