The mangrove ecosystem supports biodiversity and ecology and plays a vital role in providing economic security to coastal fishers. A severe outbreak of the moth Hyblaea puera occurred along the Thane creek in Mumbai (Maharashtra, India) between September and October 2019. The ecological interaction of pest species in a mangrove ecosystem is complex and very few detailed studies have been undertaken along the Indian coast. There is evidence that infestation can have a negative impact on the already threatened mangrove ecosystem. This study investigates the mangrove infestation, the influence of the infestation on the Leaf Area Index (LAI), rainfall’s effect on such outbreaks’ occurrence, and spectral reflectance in infested and non-infested mangroves. Sentinel 2 MSI data was processed using the QGIS platform. There were two dominant mangrove species, Avicennia marina and Sonneratia apetala, of which the most affected species was A. marina. The study revealed that 67.90% (50.61 km2) of the mangrove area defoliated due to this outbreak, out of which 30.20% (22.50 km2) was highly defoliated, 37.70% (28.11 km2) was less defoliated, and 32.10% (23.95 km2) was unaffected. LAI is the health indicator of a forest affected by an infestation; it indicates the reduction in canopy cover due to the infestation. The t-test was applied to determine the significance of LAI before and after the infestation along the upper stretch of the creek,t-value was 3.886 (p = 0.0011, p ≤ 0.05 significant). The spectral reflectance analysis showed a reduction in the infested mangrove’s Vegetation Red Edge and Near Infra-Red reflectance. The ANOVA result shows that the three groups, Mangrove Highly Infested, Mangrove Less Infested, and Non-Infested Mangrove, are likely spectrally separable (p = 0.020, p ≤ 0.05). The analysis revealed that rainfall intensity during an Infested year significantly differs from that in a Non-Infested year (p = 0.0067, p ≤ 0.05).