Background and Objectives The purpose of this prospective study was to evaluate the incidence and various risk factors influencing the sensory deficit in case of lingual nerve injury (LNI) in individuals whose impacted mandibular third molars are surgically removed under local anesthesia. Materials and Methods The study was based on the data collected prospectively from a random group of 100 patients who underwent surgical removal of bony impacted lower third molar in a dental hospital. Details of the patient, reason for extraction, type of impaction, method of surgery and signs and symptoms of nerve injury are recorded. Neurosensory testing was done to evaluate the LNI at 1 week, 1 months, 3 months and 6 months interval.Comparison was carried out using Chi square test. For all tests a P \ 0.05 was considered significant. Results The incidence of LNI was 4 % and of temporary in nature which recovered well within 6 months postoperatively. The age of the patient above 26 years, lingual flap retraction, depth of impaction (red line C10 mm) and duration of surgery above 30 min were the significant factors for causing LNI. Conclusions The age of the patient, depth of impaction, lingual flap retraction and longer duration of surgery are significant risk factors for LNI during mandibular third molar surgery. Greater care should be taken to avoid the morbidity and patients should be informed well ahead about the probable complications.