Dengue virus, a mosquito-borne flavivirus, is a causative agent for dengue infection, which manifests with symptoms ranging from mild fever to fatal dengue shock syndrome. The presence of four serotypes, against which immune cross-protection is short-lived and serotype cross-reactive antibodies that might enhance infection, pose a challenge to further investigate the role of virus and immune response in pathogenesis. We evaluated the viral and immunological factors that correlate with severe dengue disease in a cohort of pediatric dengue patients in New Delhi. Severe dengue disease was observed in both primary and secondary infections. Viral load had no association with disease severity but high viral load correlated with prolonged thrombocytopenia and delayed recovery. Severe dengue cases had low Th1 cytokines and a concurrent increase in the inflammatory mediators such as IL-6, IL-8 and IL-10. A transient increase in CD14+CD16+ intermediate monocytes was observed early in infection. Sorting of monocytes from dengue patient peripheral blood mononuclear cells revealed that it is the CD14+ cells, but not the CD16+ or the T or B cells, that were infected with dengue virus and were major producers of IL-10. Using the Boruta algorithm, reduced interferon-α levels and enhanced aforementioned pro-inflammatory cytokines were identified as some of the distinctive markers of severe dengue. Furthermore, the reduction in the levels of IL-8 and IL-10 were identified as the most significant markers of recovery from severe disease. Our results provide further insights into the immune response of children to primary and secondary dengue infection and help us to understand the complex interplay between the intrinsic factors in dengue pathogenesis.