The biennial survey of 50,949 students conducted for the agency by the University of Waterloo in Ontario found 3 percent of students reported smoking daily in 2010-2011, down from 4 percent in 2008-2009.
In the previous survey, 67 percent of students said they hadn't taken even a single puff of a cigarette, but that number rose to 74 percent of abstainers in the most recent sampling.
Minister of Health Leona Aglukkaq said she is pleased government anti-smoking campaigns for youth appear to be making headway.
"After seeing smoking rates hit historic lows in Canada recently, these new statistics are encouraging," she said.
Alcohol use was also down for the grade 7-12 demographic, with drinking in the previous 12 months down to 45 percent from 53 percent in 2008-2009.
"Cannabis [marijuana] use was reported by 21 percent of students in grades 7-12, compared to 27 percent in 2008-2009," the report said.
No margin of error was given for the survey.