A new approach to cross impact analysis using probabilistic system dynamics(PSD) is presented in this article. The previous models using PSD consist of system dynamics models as a basis which are interacting with cross impact analysis (CIA) sectors. In this model, the policy impact analysis part is separated from the CIA sectors and is constituted an independent subsectors of the model. The policy subsector is designed to separate the policy impact and provide feedback both to the system dynamics base model and cross impact analysis sectors. The new technique is applied to the forecasting, assessment and policy formulation of air pollution in Seoul metropolitan area in 2,000. The results show that the new tool consider policy effects more effectively than the previous PSD models.