Why do people choose to reside in cities? How does urban pollution affect their location decisions? This paper provides an overview of the literature that studies how different agglomeration and dispersion forces affect the internal structure and the size of cities. In particular, we discuss models that investigate the role of urban pollution on the structure of cities. We show that pollution associated with the industrial, residential and transport sectors has an impact on different land uses and might lead to either monocentric or polycentric urban forms. We also examine the effect of land use, environmental and transport policies on urban form and urban pollution levels. We conclude by discussing the policy challenges that can be identified in order to efficiently manage urbanisation and create sustainable cities.