Vector-borne diseases (VBDs) are important contributors to the global disease burden and are a key factor in perpetuating economic inequality. Although environmental changes are often cited as drivers of VBDs, the link between deforestation and VBD occurrence remains unclear. Here, we examined this relationship in detail using the spread of visceral leishmaniasis (VL) in São Paulo state (Brazil) as the case study. We used a two-step approach to estimate the causal effects (overall, direct, and indirect) of deforestation on the occurrence of the VL vector, canine visceral leishmaniasis (CVL), and human visceral leishmaniasis (HVL). We first estimated the parameters via a double Metropolis–Hastings algorithm and then estimated the causal effects through a Gibbs sampler. We observed that the odds of vector, CVL, and HVL occurrence were 2.63-, 2.07-, and 3.18-fold higher, respectively, in deforested compared with forested municipalities. We also identified a significant influence of the presence of vector, CVL, and HVL in one municipality on disease occurrence in previously naive neighbouring municipalities. Lastly, we found that a hypothetical reduction in deforestation prevalence from 50 to 0% across the state would reduce vector, CVL, and HVL occurrence by 11%, 6.67%, and 29.87%, respectively. Our results suggest that implementing an eco-friendly development strategy that considers trade-offs between agriculture, urbanization, and conservation could be an effective mechanism of controlling VL.