— In order to accommodate the constantly growing number of vehicles on the road with which infrastructure provision is failing to cope, new means of optimizing the available road space are required. This paper presents a novel adaptive vehicle routing algorithm for TraffCon - an innovative Traffic Management System enabled by wireless vehicular networks. The algorithm combats the vehicular traffic congestion problem by seeking to optimize the usage of existing road capacity, while also minimising vehicle fuel consumption and emissions. Results demonstrate that the algorithm significantly increases road utilisation, reduces congestion, average journey times and fuel consumption in comparison with existing approaches.