High concentrations of benzene and sulphur in the city of Pancevo prompted authorities to sound emergency sirens from 11:00 pm (2200 GMT) on Tuesday, warning residents to remain indoors, media reports said.
Pancevo, about 15 kilometres (10 miles) northwest of Belgrade, is an industrial city of around 100,000 inhabitants, many of whom work at its oil refinery, fertiliser plant and plastics factory.
It frequently suffers from high pollution levels.
The alarms were sounded after the level of benzene had risen to 100 micrograms per cubic metre and sulphur 10 micrograms per cubic metre, the private B92 radio station reported.
They were switched off when the situation stabilised at around 3:30 am (0230 GMT).
Serbian President Boris Tadic paid a visit to Pancevo overnight, meeting with local authorities at the city's petrochemicals complex, which is believed to be the source of the contamination.
The pollution represented "a warning to authorities, who should take urgent measures in order to prevent such incidents from recurring," said Pancevo Mayor Srdjan Mikovic, quoted by B92.
Pancevo's refinery, fertiliser plant and plastics factory were targets of NATO bombing during its 11-week campaign against the former Yugoslavia over a Serbian crackdown against Kosovo Albanians.