The role of physical inactivity as a contributor to non-communicable disease risk in children and youth is widely recognized. Air pollution and the built environment can limit participation in physical activity and exacerbate non-communicable disease risk; however, the relationships between perceptions of air pollution, built environment, and health behaviours are not fully understood, particularly among children and youth in low and middle-income countries. Currently, there are no studies capturing how child and youth perceptions of air pollution and built environment are associated with physical activity in India, thus, this study investigated the association between perceived air pollution and built environment on moderate-to-vigorous physical activity (MVPA) levels of Indian children and youth. Online surveys captured MVPA, perception of air pollution as a problem, built environment factors, as well as relevant sociodemographic characteristics from parents and children aged 5–17 years in partnership with 41 schools across 28 urban and rural locations during the Coronavirus disease lockdowns in 2021. After adjusting for age, gender, and location, a significant association was found between the perception of air pollution as a problem and MVPA levels (β = −18.365, p < 0.001). Similarly, the perception of a high crime rate was associated with lower MVPA levels (β = −23.383, p = 0.002). Reporting the presence of zebra crossings, pedestrian signals, or attractive natural sightings were associated with higher MVPA levels; however, this association varied across sociodemographic groups. These findings emphasize the importance of addressing air pollution and improving the built environment to facilitate outdoor active living, including active transportation, among children and youth – solutions that are particularly relevant not only for preventing non-communicable disease risk but also for climate change mitigation.