Around 1501, Vasco da Gama married Catarina de Ataíde, daughter of Álvaro de Ataíde, the alcaide-mór of Alvor (Algarve), and a prominent nobleman connected by kinship with the powerful Almeida family (Catarina was a first cousin of D. Francisco de Almeida).

On the outgoing voyage, da Gama's fleet opened contact with the East African gold trading port of Sofala and reduced the sultanate of Kilwa to tribute, extracting a substantial sum of gold. On reaching India in October 1502, da Gama's fleet set about capturing any Arab vessel he came across in Indian waters, most notoriously the Miri, a pilgrim ship from Mecca, whose passengers he massacred in open water. He then appeared before Calicut, demanding redress for the treatment of Cabral. While the Zamorin was willing to sign a new treaty, da Gama made a call to the Hindu king to expel all Muslims from Calicut before beginning negotiations, which was turned down. The Portuguese fleet then bombarded the city for nearly two days from the sea shore, severely damaging the unfortified city. He also captured several rice vessels and cut off the crew's hands, ears and noses, dispatching them with an insulting note to the Zamorin.

Vasco da Gama arrived back in Portugal in September 1503, effectively having failed in his mission to bring the Zamorin to submission. This failure, and the subsequent more galling failure of his uncle Vicente Sodré to protect the Portuguese factory in Cochin, probably counted against any further rewards. When the Portuguese king Manuel I of Portugal decided to appoint the first governor and viceroy of Portuguese India in 1505, da Gama was conspicuously overlooked, and the post given to Francisco de Almeida.

For the next two decades, Vasco da Gama lived out a quiet life, unwelcome in the royal court and sidelined from Indian affairs. His attempts to return to the favor of Manuel I (including switching over to the Order of Christ in 1507), yielded little. Almeida, the larger-than-life Afonso de Albuquerque and, later on, Albergaria and Sequeira, were the king's preferred point men for India.

After Ferdinand Magellan defected to the Crown of Castile in 1518, Vasco da Gama threatened to do the same, prompting the king to undertake steps to retain him in Portugal and avoid the embarrassment of losing his own "Admiral of the Indies" to Spain. In 1519, after years of ignoring his petitions, King Manuel I finally hurried to give Vasco da Gama a feudal title, appointing him the first Count of Vidigueira, a count title created by a royal decree issued in Évora on 29 December, after a complicated agreement with Dom Jaime, Duke of Braganza, who ceded him on payment the towns of Vidigueira and Vila dos Frades. The decree granted Vasco da Gama and his heirs all the revenues and privileges related, thus establishing da Gama as the first Portuguese count who was not born with royal blood.

After the death of King Manuel I in late 1521, his son and successor, King John III of Portugal set about reviewing the Portuguese government overseas. Turning away from the old Albuquerque clique (now represented by Diogo Lopes de Sequeira), John III looked for a fresh start. Vasco da Gama re-emerged from his political wilderness as an important adviser to the new king's appointments and strategy. Seeing the new Spanish threat to the Maluku Islands as the priority, Vasco da Gama advised against the obsession with Arabia that had pervaded much of the Manueline period, and continued to be the dominant concern of Duarte de Menezes, then-governor of Portuguese India. Menezes also turned out to be incompetent and corrupt, subject to numerous complaints. As a result, John III decided to appoint Vasco da Gama himself to replace Menezes, confident that the magic of his name and memory of his deeds might better impress his authority on Portuguese India, and manage the transition to a new government and new strategy.

Setting out in April 1524, with a fleet of fourteen ships, Vasco da Gama took as his flagship the famous large carrack Santa Catarina do Monte Sinai on her last journey to India, along with two of his sons, Estêvão and Paulo. After a troubled journey (four or five of the ships were lost en route), he arrived in India in September. Vasco da Gama immediately invoked his high viceregent powers to impose a new order in Portuguese India, replacing all the old officials with his own appointments. But Gama contracted malaria not long after arriving, and died in the city of Cochin on Christmas Eve in 1524, three months after his arrival. As per royal instructions, da Gama was succeeded as governor of India by one the captains who had come with him, Henrique de Menezes (no relation to Duarte). Da Gama's sons Estêvão and Paulo immediately lost their posts and joined the returning fleet of early 1525 (along with the dismissed Duarte de Menezes and Luís de Menezes).

Vasco da Gama's body was first buried at St. Francis Church, which was located at Fort Kochi in the city of Kochi, but his remains were returned to Portugal in 1539. The body of Vasco da Gama was re-interred in Vidigueira in a casket decorated with gold and jewels.

His male line issue became extinct in 1747, though the title went through female line.

The 1865 grand opera L'Africaine: Opéra en Cinq Actes, composed by Giacomo Meyerbeer from a libretto by Eugène Scribe, prominently includes the character of Vasco da Gama. The events depicted, however, are fictitious. Meyerbeer's working title for the opera was Vasco da Gama. A 1989 production of the opera by the San Francisco Opera featured noted tenor Plácido Domingo in the role of da Gama. The 19th-century Composer Louis-Albert Bourgault-Ducoudray composed an eponymous 1872 opera based on da Gama's life and exploits at sea.

South African musician Hugh Masekela recorded an anti-colonialist song entitled "Colonial Man", which contains the lyrics "Vasco da Gama was no friend of mine", and another song entitled "Vasco da Gama (The Sailor Man)". Both songs were included in his 1976 album Colonial Man.

The expedition had exacted a large cost – one ship and over half the men had been lost. It had also failed in its principal mission of securing a commercial treaty with Calicut. Nonetheless, the spices brought back on the remaining two ships were sold at an enormous profit to the crown. Vasco da Gama was justly celebrated for opening a direct sea route to Asia. His path would be followed up thereafter by yearly Portuguese India Armadas.

In March 2016, archaeologists working off the coast of Oman identified a shipwreck believed to be that of the Esmeralda from da Gama's 1502-1503 fleet. The wreck was initially discovered in 1998. Later underwater excavations took place between 2013 and 2015 through a partnership between the Oman Ministry of Heritage and Culture and Bluewater Recoveries Ltd., a shipwreck recovery company. The vessel was identified through such artifacts as a "Portuguese coin minted for trade with India (one of only two coins of this type known to exist) and stone cannonballs engraved with what appear to be the initials of Vincente Sodré, da Gama's maternal uncle and the commander of the Esmeralda."