The objective of this study is to provide a comprehensive analysis of the environmental impact of diesel and electric buses, with a focus on pollutant emissions along a mixed urban–rural route in small urban settings. Utilizing a detailed simulation model, this research compares emissions from a diesel bus and an electric bus on a specific route in a small town in central Italy. Key findings reveal that electric buses significantly reduce local exhaust emissions but are not entirely emission-free, considering the full life cycle, including electricity generation. The Well-to-Wheel analysis shows lower ${\mathrm{CO}}_2$ emissions for the electric bus compared with the diesel bus, with a substantial part of the emissions occurring at power generation facilities. Non-exhaust emissions, especially Total Suspended Particles, are similar for both bus types. This study highlights the advantages of adopting electric buses in urban areas to decrease local air pollution and greenhouse gas emissions. However, it also underscores the importance of cleaner electricity generation methods to fully leverage the environmental benefits of electric vehicles. The findings provide valuable insights for decision makers and urban planners in developing sustainable urban transportation systems.