Remote sensing can be a rapid, accurate, and simple method for assessing pest damage on plants. The objectives of this study were to identify spectral wavelengths sensitive to cotton aphid infestation. Then, the normalized difference spectral indices (NDSI) and ratio spectral indices (RSI) based on the leaf spectrum were obtained within 350–2500 nm, and their correlation with infestation were qualified. The results showed that leaf spectral reflectance decreased in the visible range (350–700 nm) and the near-infrared range (NIR, 700–1300 nm) as aphid damage severity increased, and significant differences were found in blue, green, red, NIR and short-wave infrared (SWIR) band regions between different grades of aphid damage severity. Decrease in Chlorophyll a (Chl a) pigment was more significant than that in Chlorophyll (Chl b) in the infested plants and the Chl a/b ratio showed a decreasing trend with increase in aphid damage severity. The sensitive spectral bands were mainly within NIR and SWIR ranges. The best spectral indices NDSI (R678, R1471) and RSI (R1975, R1904) were formulated with these sensitive spectral regions through reducing precise sampling method. These new indices along with 16 other stress related indices compiled from literature were further tested for their ability to detect aphid damage severity. The two indices in this study showed significantly higher coefficients of determination (R2 of 0.81 and 0.81, p < 0.01) and the least RMSE values (RMSE of 0.50 and 0.49), and hence have potential application in assessing aphid infestation severity in cotton.