The rodent entered the cash terminal in northeastern India through a small hole meant for cables, police superintendent Mugdha Jyoti Mahanta said.
The machine, in the town of Tinsukia, broke down on 20 May, but technicians did not arrive to fix it until 11 June.
When they opened it up, they found the dead rat and notes worth almost 1.3 million rupees (£14,000) chewed to shreds inside.
The notes were in 500 rupee and 2,000 rupee denominations.
"We are surprised at what has happened. An investigation has been ordered," said an official from the State Bank of India, Bimal Debroy.
The ATM is overseen by another company, he added.
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