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The poorly managed effluents from industrial activities in Bangladesh contaminate groundwater aquifer with subsequent health risks as the most of the Bangladeshi people depend on groundwater for their drinking water sources. This study aimed to investigate the contamination level in the groundwater surrounding the Setabganj Sugar Mills Limited, Dinajpur, Bangladesh with special attention on the associated health risk of the dwellers residing around it. Stratified random sampling was adopted to collect 12 water samples from tubewell to identify concentration of heavy metals using atomic absorption spectroscopy. We found metal concentration in groundwater in the order of Mn>Fe>Co>Cu>Pb>Zn>Cr among which mean value of Mn concentration exceeded the drinking water standard while Fe and Pb concentrations in few samples exceeded the standards. Metal Index, Degree of Contamination, Pollution Load Index and Heavy Metal Pollution Index confirmed more groundwater contamination at the vicinity of sugar mill compared with the other samples that taken from far away of sugar mill. Health risk assessment ensures that Infants and children have a great susceptibility to the contaminated groundwater all over the study area while the adults are at high risk only in the sugar mill region. Principal Component Analysis and Factor Analysis reveal that sugar mill contributes largely to groundwater contamination along with other anthropogenic and natural sources. The findings of this study will help the environmental managers and policy makers to understand the potential health risks from the effluent of sugar mills and will knock them to treat it prior to discharge.