This paper examines the environmental and economic impact of cloudburst-triggered debris flow and flash flood in four villages of Uttarkashi district, Uttarakhand Himalaya. On 18th July 2021 at 8:30 p.m., a cloudburst took place on the top of the Hari Maharaj Parvat, which triggered a huge debris flows and flash floods, affecting 143 households of four villages of downstream areas. Immediately after the cloudburst occurred, the authors visited four affected villages—Nirakot, Mando, Kankrari, and Siror. A structured questionnaire was constructed and questions were framed and asked from 143 heads of affected households on the impact of debris flows and flash floods on people’s life, settlements, cowsheds, bridges, trees, forests, and arable land in and around the villages. The volume of debris, boulders, pebbles, gravels, and mud was assessed. It was noticed that all four villages got lots of destructions in terms of loss of life—people and animals, and property damage—land, crops, and infrastructural facilities. This study shows that the location of the settlements along with the proximity of the streams, which are very violent during the monsoon season, has led to the high impact of debris flow on the affected villages. We suggest that the old inhabited areas, which are located in the risk zones, can be relocated and the new settlements can be constructed in safe places using suitability analyses.