Volvo says all new models will have electric motors from 2019
From 2019, the Swedish manufacturer will only launch cars that are either pure electric or hybrids combining electric and conventional engines.
Volvo Cars president Hakan Samuelsson said the step "marks the end of the solely combustion engine-powered car".
He went on: "This is about the customer. People increasingly demand electrified cars and we want to respond to our customers' current and future needs."
The firm will launch five fully electric cars between 2019 and 2021, three of which will be Volvos and two from Polestar, its high-performance car arm.
Mr Samuelsson added: "Volvo Cars has stated that it plans to have sold a total of one million electrified cars by 2025.
"When we said it we meant it. This is how we are going to do it."
Air pollution is linked to an estimated 40,000 early deaths a year in the UK and 37 out of 43 areas are exceeding legal European Union limits for the key pollutant nitrogen dioxide, much of which comes from diesel engines.
Volvo claims the announcement underlines its commitment to minimising its environmental impact and making cities cleaner.
It has committed to having a climate-neutral manufacturing operation by 2025.
Greenpeace UK clean air campaigner Paul Morozzo said Volvo had "recognised the huge gains to be made by leading the way in electric".
He went on: "We know electric vehicles are the future, and it's not a case of if, but when, old style cars powered by climate wrecking fossil fuels will be a thing of the past.
"Instead of continuing to invest in new diesel technology, all car manufacturers should be turning their attention solely to electric and hybrid technology."
US firm Tesla announced on Monday that its first mass-market electric car, the Model 3, will go on sale on July 28 after passing regulatory requirements.
Latest figures from the Society of Motor Manufacturers and Traders show that 730,000 new alternatively fuelled vehicles have been bought in the UK so far this year.
This represents a market share of 4.2%, up from 3.2% last year.
The Government published long-awaited plans to cut pollution in May, with measures including a scrappage scheme for the worst polluting vehicles, retrofitting bus and lorry fleets, removing road humps to improve traffic flow and encouraging more electric cars.