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The association between daily variations in urban air quality and mortality has been well documented using time series statistical methods. This approach assumes a constant association over time. We develop a space‐time dynamic model that relaxes this assumption, thus more directly examining the hypothesis that improvements in air quality translate into improvements in public health. We postulate a Bayesian hierarchical two‐level model to estimate annual mortality risks at regional and national levels and to track both risk and heterogeneity of risk within and between regions over time. We illustrate our methods using daily nitrogen dioxide concentrations (NO2) and nonaccidental mortality data collected for 1984–2004 in 24 Canadian cities. Estimates of risk and heterogeneity are compared by cause of mortality (cardio‐pulmonary [CP] versus non‐CP) and season, respectively. Over the entire period, the NO2 risk for CP mortality was slightly lower but with a narrower credible interval than that for non‐CP mortality, mainly due to an unusually low risk for a single year (1998). Warm season NO2 risk was higher than cold season risk for both CP and non‐CP mortality. For 21 years overall there were no significant differences detected among the four regional NO2 risks. We found overall that there was no strong evidence for time trends in NO2 risk at national or regional levels. However, an increasing linear time trend in the annual between‐region heterogeneities was detected, which suggests the differences in risk among the four regions are getting larger, and further studies are necessary to understand the increasing heterogeneity.