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Beijing came 13th in the list of cities with the worst air.
Shanghai's annual average PM2.5 density was 60.7 micrograms per square meter last year, compared to the national standard of 35, environmental organization Greenpeace reported.
PM2.5 refers to airborne particles smaller than 2.5 micrometers in diameter that are the cause of urban smog and hazardous to health.
Greenpeace said that, in December, Shanghai's PM2.5 density peaked at 421 micrograms per square meter, five times the daily standard of 75.
The Greenpeace report was based on data from China's Environmental Protection Ministry website as well as environmental protection bureaus in the 74 cities.
The Yangtze River Delta region has seen increasingly severe air pollution in recent years that has affected the air quality in Shanghai.
Ten cities among 13 monitoring data in Shanghai's neighboring province to the north, Jiangsu, recorded double the national annual standard for PM2.5, while nearly all the cities in Zhejiang Province, to Shanghai's south, exceeded the standard.
In December, when the PM2.5 reading was at its peak in Shanghai, it was four times the standard in Zhejiang's capital of Hangzhou and Jiangsu's Nanjing, according to the Greenpeace.
"Some 20 percent of the PM2.5 pollution in Shanghai is from other provinces," said Zhang Quan, Shanghai Environmental Protection Bureau director.
Vehicle and factory emissions accounted for 50 percent of the city's pollution, followed by dust from construction sites (10.5 percent), power stations (7.3 percent) and straw burning (10 percent).
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