It is often argued that liquid biofuels are cleaner than fossil fuels, and therefore better for human health, however, the evidence on this issue is still unclear. Brazil’s high uptake of ethanol and role as a major producer makes it the most appropriate case study to assess the merits of different biofuel policies. Accordingly, we modeled the impact on air quality and health of two future fuel scenarios in São Paulo State: a business-as-usual scenario where ethanol production and use proceeds according to government predictions and a counterfactual scenario where ethanol is frozen at 2010 levels and future transport fuel demand is met with gasoline. The population-weighted exposure to fine particulate matter (PM2.5) and ozone was 3.0 μg/m3 and 0.3 ppb lower, respectively, in 2020 in the scenario emphasizing gasoline compared with the business-as-usual (ethanol) scenario. The lower exposure to both pollutants in the gasoline scenario would result in the population living 1100 additional life-years in the first year, and if sustained, would increase to 40,000 life-years in year 20 and continue to rise. Without additional measures to limit emissions, increasing the use of ethanol in Brazil could lead to higher air pollution-related population health burdens when compared to policy that prioritizes gasoline.