Dengue fever, a mosquito-borne viral disease, has become a major public health problem with marked expansion in recent decades. Dengue has now become hyperendemic in India with co-circulation of all the four serotypes. Herein, we report an unprecedented outbreak which occurred during August to October 2011 in Odisha, eastern India. This is the first report of a large epidemic in Odisha. Detailed serological and molecular investigation was carried out to identify the aetiology. Almost half of the samples were found to be dengue antigen (NS1) positive. Further molecular assays revealed circulation of mixed dengue serotypes (DENV-2 and DENV-3). Cosmopolitan genotype of DENV-2 and -3 were identified as the aetiology by phylogenetic analysis. Interestingly, a new lineage of DENV-3 within cosmopolitan genotype was incriminated in this outbreak. The emergence of the unprecedented magnitude of the dengue outbreak with the involvement of a novel lineage of DENV in a newer state of India is a major cause for concern. There is an urgent need to monitor phylodynamics of dengue viruses in other endemic areas.