Chemicals abandoned at the plant continue to leak and pollute the groundwater. Whether the chemicals pose a health hazard is disputed.

Civil and criminal cases are pending in the United States District Court, Manhattan and the District Court of Bhopal, India, involvng UCC, UCIL employees, and Warren Anderson, UCC CEO at the time of the disaster. In June 2010, seven ex-employees, including the former UCIL chairman, were convicted in Bhopal of causing death by negligence and sentenced to two years imprisonment and a fine of about $2,000 each, the maximum punishment allowed by law. An eighth former employee was also convicted but died before judgment was passed.

The UCIL factory was built in 1969 to produce the pesticide Sevin (UCC's brand name for carbaryl) using methyl isocyanate (MIC) as an intermediate. A MIC production plant was added in 1979.

During the night of December 2–3, 1984, water entered a tank containing 42 tons of MIC. The resulting exothermic reaction increased the temperature inside the tank to over 200 °C (392 °F) and raised the pressure. The tank vented releasing toxic gases into the atmosphere. The gases were blown by northwesterly winds over Bhopal.

Theories of how the water entered the tank differ. At the time, workers were cleaning out a clogged pipe with water about 400 feet from the tank. The operators assumed that owing to bad maintenance and leaking valves, it was possible for the water to leak into the tank. However, this water entry route could not be reproduced. UCC also maintains that this route was not possible, but instead alleges water was introduced directly into the tank as an act of sabotage by a disgruntled worker via a connection to a missing pressure gauge on the top of the tank. Early the next morning, a UCIL manager asked the instrument engineer to replace the gauge. UCIL's investigation team found no evidence of the necessary connection; however, the investigation was totally controlled by the government denying UCC investigators access to the tank or interviews with the operators. The 1985 reports give a picture of what led to the disaster and how it developed, although they differ in details.

Factors leading to the magnitude of the gas leak include:

The problem was made worse by the mushrooming of slums in the vicinity of the plant, non-existent catastrophe plans, and shortcomings in health care and socio-economic rehabilitation.

Much speculation arose in the aftermath. The closing of the plant to outsiders (including UCC) by the Indian government and the failure to make data public contributed to the confusion. The Council of Scientific and Industrial Research (CSIR) were forbidden to publish their data on health effects until after 1994. The initial investigation was conducted entirely by CSIR and the Central Bureau of Investigation.

UCC produced carbaryl using MIC as an intermediate. After the Bhopal plant was built, other manufacturers including Bayer produced carbaryl without MIC, though at a greater manufacturing cost. However, Bayer also uses the UCC process at the chemical plant once owned by UCC at Institute, West Virginia, USA.

Other factors identified by the inquiry included: use of a more dangerous pesticide manufacturing method, large-scale MIC storage, plant location close to a densely populated area, undersized safety devices, and the dependence on manual operations.