Peste des petits ruminants (PPR), a disease caused by small ruminant morbillivirus (SRM), is highly contagious with high morbidity and mortality. Controlling PPR requires a proper understanding of the epidemiological dynamics and impact of the disease in a range of geographical areas and management systems. Karenga district, located in the pastoral region of Karamoja in northeastern Uganda, and in the vicinity of Kidepo Valley National Park, is characterised by free cross-border (South Sudan and Kenya) livestock trade, communal grazing, and transhumance. This study was conducted from November through December 2020 to determine the seroprevalence of anti-SRM antibodies, the risk factors associated with the occurrence, and the socio-economic impact of PPR in Karenga. A total of 22 kraals were randomly selected from all administrative units, and 684 small ruminants (sheep = 115, goats = 569) were selected for serum collection using systematic random sampling. Exposure to SRM was determined using a competitive enzyme-linked immunosorbent assay. The overall true seroprevalence of SRM antibodies was high, 51.4 (95% confidence interval [CI] 45–52.6). Multivariate logistic regression for risk factors showed that seroprevalence varied significantly by location (26.8% to 87.8%, odds ratio (OR) ≤ 14.5). The odds of exposure to SRM were higher in sheep (73.9%) than in goats (43.8%) (OR = 1.7, p = 0.08), and seropositivity was higher in animals greater than two years old (65.5%; OR = 11.1, p < 0.001), or those one to two years old (24.7%; OR = 1.6, p = 0.2), compared to small ruminants less than one year old (16.1%). Using participatory epidemiology approaches (semi-structured interviews, clinical examinations, pairwise ranking, proportional piling, impact matrix scoring) with 15 key informants and 22 focus groups of pastoralists, PPR was the second most important small ruminant disease: relative morbidity 14%, relative mortality 9%, and case fatality rate 78%, and impacted productivity mainly in terms of treatment costs, mortality, marketability, and conflicts. These findings provide evidence to support the implementation of disease surveillance and control strategies to mitigate the impact of PPR in Karamoja and other pastoral areas in eastern Africa.