Objectives To describe the epidemiological features of a school varicella outbreak in Dongguan City, China, to identify the reasons underlying persistent spread, and to assess the effectiveness of the varicella vaccine. Methods We identified all cases during the outbreak. We described the outbreak epidemic course and examined the influence of the following variables on the outbreak: sleeping in the dormitory, eating in school, taking school transportation, hand-washing habits, morning examinations, and effectiveness of case isolation. Logistic regression was used to estimate the odds ratio and 95% confidence interval (CI) of contracting varicella. Results A total of 92 varicella cases were reported, accounting for 5.53% (92/1663) of all students. Among cases, 64.13% (59/92) were vaccinated. The outbreak lasted for 93 days and occurred in six generations. Vaccination coverage was between 78.05% and 85.67%. The varicella vaccine was effective in 56.63% of recipients (95% CI: 35.49–70.84%). Vaccine effectiveness significantly decreased after 4–6 years. Conclusions The varicella vaccine was unable to prevent virus spread even with high vaccination coverage. Delayed and inefficient isolation of cases was the primary cause of the persistent outbreak.