In the third week of September 2022, an outbreak of measles was reported from a slum in Eastern Mumbai, India. We sought to investigate whether failure to vaccinate or vaccine failure was the cause. We constructed an epidemic curve, drew a spot map, and calculated the attack rate and case-fatality ratio. We calculated vaccine effectiveness (VE) for one and two doses of measles vaccine in an unmatched case–control study and did stratified analysis by sex, availability of vaccination card, and migrant status. We identified 358 cases and four deaths with a 11.3% attack rate and 1.1% case fatality, both being highest among 0–24-month-old boys. The epidemic curve suggested a propagated mode of spread. The VE for two doses was 64% (95% confidence interval (CI): 23–73%) among under-5-year-old children and 70% (95% CI: 28–88%) among 5–15-year-old children. Failure to vaccinate, consequent to the COVID-19 pandemic, and vaccine hesitancy might have led to the accumulation of susceptible children in the community. Additionally, the occurrence of case-patients among vaccinated suggests reduced VE, which needs further investigation into humoral and cell-mediated immunity as well as contributory factors including nutritional status. Outbreak response immunization to complete immunization of missed and dropout children was carried out to control the outbreak.