Traffic congestion is a problem in day to day life, especially in big cities. Various traffic control infrastructure systems have been deployed to monitor and improve the flow of traffic across cities. Real-time congestion detection can serve for many useful purposes that include sending warnings to drivers approaching the congested area and daily route planning. Most of the existing congestion detection solutions combine historical data with continuous sensor readings and rely on data collected from multiple sensors deployed on the road, measuring the speed of vehicles. While in our work we present a framework that works in a pure streaming setting where historic data is not available before processing. The traffic data streams, possibly unbounded, arrive in real-time. Moreover, the data used in our case is collected only from sensors placed on the intersections of the road. Therefore, we investigate in creating a real-time congestion detection and reduction solution, that works on traffic streams without any prior knowledge. The goal of our work is 1) to detect traffic jams in real-time, and 2) to reduce the congestion in the traffic jam areas.In this work, we present a real-time traffic jam detection and congestion reduction framework: 1) We propose a directed weighted graph representation of the traffic infrastructure network for capturing dependencies between sensor data to measure traffic congestion; 2) We present online traffic jam detection and congestion reduction techniques built on a modern stream processing system, i.e., Apache Flink; 3) We develop dynamic traffic light policies for controlling traffic in congested areas to reduce the travel time of vehicles. Our experimental results indicate that we are able to detect traffic jams in real-time and deploy new traffic light policies which result in 27% less travel time at the best and 8% less travel time on average compared to the travel time with default traffic light policies. Our scalability results show that our system is able to handle high-intensity streaming data with high throughput and low latency.