In 2023, Nepal faced its second largest dengue outbreak ever, following a record-breaking number of dengue cases in 2022, characterized by the expansion of infections into areas of higher altitudes. However, the characteristics of the 2023 circulating dengue virus (DENV) and the vector density remain poorly understood. Therefore, we performed DENV serotyping, clinical and laboratory assessment, and entomological analysis of the 2023 outbreak in central Nepal. A total of 396 fever cases in Dhading hospital suspected of being DENV positive were enrolled, and blood samples were collected and tested by different techniques including PCR. Of these, 278 (70.2%) had confirmed DENV infection. Multiple serotypes (DENV-1, -2, and -3) were detected. DENV-2 (97.5%) re-emerged after six years in Dhading while DENV-3 was identified for the first time. Dengue inpatients had significantly higher frequency of anorexia, myalgia, rash, diarrhea, nausea, vomiting, abdominal pain, and thrombocytopenia (p < 0.05). In this area, Aedes mosquitoes largely predominated (90.7%) with the majority being A. aegypti (60.7%). We also found high levels of Aedes index (20.0%) and container index (16.7%). We confirmed multiple DENV serotype circulation with serotype re-emergence and new serotype introduction, and high vector density in 2023. These findings call for the urgent initiation and scaling up of DENV molecular surveillance in human and mosquito populations for dengue control and prevention in Nepal.