The National Security Council said the pollution index had exceeded the emergency level of 500, caused by illegal fires used to clear land on the Indonesian islands of Sumatra and Kalimantan, Channel NewsAsia reported.
Hundreds of schools were closed in the capital of Kuala Lumpur and surrounding areas. Citizens were advised to stay indoors or wear masks outdoors.
Kuala Lumpur's second airport at Subang was closed late Wednesday with visibility at less than 1,000 feet. The main airport remained open but contingency plans were made in case it too had to close.
Haze in the Malacca Strait between Indonesia and Malaysia affected shipping and caused a major port facility to close briefly Wednesday.
The Meteorology Department said the situation was likely to continue for several days, but conditions could improve next week as winds from Sumatra shifted.
Malaysian Foreign Minister Syed Hamid Albar said emergency talks with Indonesian officials would begin Friday in Jakarta, but he said Malaysia would take a soft approach so as not to damage fragile relations with its neighbor.