Dental education assumes an indispensable role in adequately equipping students for a successful career in dentistry. Error-based active learning, an innovative approach in dental education, is a combination of mistake-driven learning (MDL) and case-based learning (CBL) to provide a transformative learning atmosphere for students. While active learning has gained popularity in dental education, the effectiveness of error-based active learning remains unexplored. This study aims to evaluate the effectiveness of error-based active learning among final-year dental undergraduate students in comparison with the conventional lecture-based approach. A parallel-arm single-blind randomized controlled trial was conducted in a dental institute in India from November 2022 to December 2022. A total of 74 students were randomly allocated to two groups: Group A (n = 37) received error-based active learning and group B (n = 37) received conventional lecture-based learning approach. Atraumatic restorative treatment (ART) was chosen as the topic for the study. The knowledge of students was assessed at three intervals: baseline, post-intervention, and 4 weeks after the intervention, using a self-designed and validated questionnaire with Cronbach's alpha of 0.87 and a content validity ratio of 0.84. A standard survey questionnaire was employed to evaluate students' perceptions of the teaching methods. Error-based active learning group outperformed the lecture-based group significantly in the post-intervention test (20.92 ± 1.42 vs 16.97 ± 3.06), with better knowledge retention (18.30 ± 2.02 vs 14.05 ± 4.26) and positive feedback from the students. The error-based active learning approach proved superior to the conventional lecture-based method in enhancing and retaining knowledge regarding ART.