Background: Lumpy skin disease (LSD) is an important viral disease causing significant economic losses in commercial livestock production. In mid-2019, an outbreak of LSD has been reported in cattle population from different parts of Bangladesh including Chattogram division. A cross-sectional surveillance study was undertaken from August 2019 to December 2019 to investigate the prevalence and associated risk factors of LSD in cattle in Chattogram district. Methods: A total of 3,327 cattle from 19 commercial farms were examined for the LSD specific skin lesions and associated risk factors. A total of 120 skin biopsies were collected from the suspected animal for the confirmation of the disease using molecular detection and histopathological examination. Partial genome sequencing and phylogenetic analyses were performed on selected viral isolates. Results: The overall clinical prevalence of LSD in the study population was 10% (95% confidence interval [CI]: 9.4%–11%) where the highest farm level outbreak frequency was 63.33% (95% CI: 45.51%–78.13%) and the lowest 4.22% (95% CI: 3.39%–5.25%). Crossbred and female cattle showed a significantly higher prevalence of the disease compared to their counterparts. Introduction of new animals in farms was found to be one of the most significant risk factors in the transmission of the disease. All suspected skin biopsies were positive for LSD virus (LSDV) infection with granulomatous and pyogranulomatous dermatitis was revealed on histopathology. Phylogenetic analysis based on the inverted terminal repeat region of the LSDV gene suggested that the locally circulating strain was closely related to the strains isolated from the Middle East and North African countries. Conclusions: The data generated in this study would be beneficial to the field veterinarians and animal health decision makers in the country as well as it will aid in taking appropriate measures to prevent further relapse or outbreak of this disease in future.