The traffic police, known as DAI, is a large unit that employs 23,000 people. It is also known for being notoriously corrupt.
During a meeting at the Interior Ministry, Yushchenko said DAI had fully discredited itself.
"You have discredited yourself. That's why I have decided that there will be no DAI in this country. A draft of a decree will be ready in 24 hours. Guys, enough with making money on the roads. Enough with harassing drivers," Yushchenko said.
Yushchenko said the "the main objective of traffic police is to provide assistance" for drivers, but officers "come out to harass people." The president said his government's efforts at reforming the traffic police had proved unsuccessful.
DAI is very unpopular with drivers as they impose fines on the spot and often demand bribes.
So there's little wonder that many people on Kyiv's streets support the president's move. "I support it [the decision] because they are doing nothing good but only take money and hide in the bushes as Yushchenko says," one passerby said.
Others say it will be difficult without traffic police but agree there is hardly another way out.
"I do not have a definite opinion about it because it will be difficult without DAI. Drivers are not educated. On the other hand, DAI has compromised itself, so I support the move," another passerby said.
However, Larysa Denyssenko, who represents Transparency International in Ukraine, is skeptical about the move. She says DAI was probably one of the most corrupt institutions in the country and something had to be done. However, she doubts if radical measures will work.
"Liquidation of the institution does not always mean solving a problem. Yes, traffic police in many sociological polls figures as one of the most corrupt institutions in Ukraine. However, I don't think it is the most clever measure to root out corruption by rooting out the institution itself," Denyssenko says.
Denyssenko says DAI tried to introduce some order on the Ukrainian roads and streets. Ukraine is known not only for traffic police corruption, but also for a high rate of car accidents.
Denyssenko says transferring traffic police work to the municipalities might work.
The authorities seem to have a similar plan. Interior Minister Yuriy Lutsenko says the DAI will be replaced with a "European level" highway patrol service.
"The majority [of police officers] will be transferred to unified patrol service. Like in all European countries, it will control street crossings and traffic on [local] roads. This patrol service will report to districts and municipalities. To control traffic outside the cities [on highways] another service with different responsibilities will be created," Lutsenko says.
The Ukrainian move is not unique. Georgian President Mikheil Saakashvili disbanded the Georgian traffic police, which employed 36,000 people, at the beginning of last year.
RFE/RL's Tbilisi bureau chief Tamar Chikovani says Georgian authorities have created a new unit named "Patrul (Patrol)." Some former traffic police officers have managed to win the competition and join the new force.
Chikovani says members of the new unit are paid better salaries and have good equipment. Many women serve in the unit. Chikovani says people are enthusiastic about the new police force and trust it very much. Recent polls show that the unit is now the country's most popular institution.
At the same meeting with the Interior Ministry officials on 18 July, President Yushchenko said that it is necessary to change all Ukrainian regional police chiefs in order to counteract corruption and enhance efficiency of law enforcement, Interfax-Ukraine reported.
"With a new personnel we will have hope that the work in regions will improve.... If we begin fighting corruption from the beginning, we should fully replace people representing the discredited part of the police," Yushchenko said, noting that oblast police directorates employ investigators who use torture and take bribes.