Air quality is not only related to the health condition of residents, but also has a profound impact on the sustainable development of the economy and society. Based on a theoretical analysis framework, this paper elaborates on the inherent mechanism of the impact of air quality on labor supply and uses instrumental variable method to empirically test the degree and mechanism of the impact of air quality on labor supply behavior of middle-aged and elderly people. The research results indicate that poor air quality will significantly reduce the probability of labor participation and labor supply time for middle-aged and elderly people, and the negative effects are significantly heterogeneous due to differences in work nature, regional industrial structure, and labor market. With the continuous promotion of ecological civilization construction, China’s air quality has been improving year by year, and the negative effects of labor supply caused by air pollution have shown a trend of weakening year by year. Mechanism testing has found that air pollution will accelerate the depreciation of individual health capital, further affecting their labor supply decisions and time. Based on this, the study proposes countermeasures and suggestions to improve air quality and labor supply, including accelerating the green transformation of development patterns, optimizing the employment environment for middle-aged and older workers, improving the labor rights protection system, strengthening the community-level public health service system, and developing a scientific and reasonable air quality evaluation system.