We assessed sociodemographic and health care factors of mothers and newborns during a 2015-2016 outbreak of microcephaly in Recife, Brazil, and we analyzed the spatial distribution and incidence risk of newborns with microcephaly in relation to socio-environmental indicators. We collected data from August 2015 through May 2016 from Brazil’s Live Birth Information System and Bulletin of Microcephaly Notification, and we geocoded the data by maternal residence. We constructed thematic maps of districts, according to socio-environmental and vector indicators. We identified spatial aggregates of newborns with microcephaly by using the Bernoulli model. We performed logistic regression analyses to compare the incidence risk of microcephaly within socio-environmental indicator groups. We geocoded 17 990 of 19 554 (92.0%) live births in Recife, of which 202 (1.1%) newborns were classified as having microcephaly, based on a head circumference of ≥2 standard deviations below the mean. Larger proportions of newborns with microcephaly (compared with newborns without microcephaly) were born to mothers who delivered in a public hospital, did not attend college, were aged ≤19, or were black or mixed race. A higher risk of microcephaly (incidence rate ratio [IRR] = 3.90; 95% confidence interval [CI], 1.88-8.06) occurred in districts with the lowest (vs highest) Municipal Human Development Index (ie, an index that assesses longevity, education, and income). The risk of microcephaly was significantly higher where rates of larvae density (IRR = 2.31; 95% CI, 1.19-4.50) and larvae detection (IRR = 2.04; 95% CI, 1.05-4.00) were higher and rates of sewage system (IRR = 2.20; 95% CI, 1.16-4.18) and garbage collection (IRR = 1.96; 95% CI, 0.99-3.88) were lower. Newborns with microcephaly lived predominantly in the poorest areas and in a high-risk cluster (relative risk = 1.89, P = .01) in the north. The disproportionate incidence of microcephaly in newborns in poor areas of Recife reinforces the need for government and public health authorities to formulate policies that promote social equity and support for families and their children with microcephaly.