The woman travelling from the western city of Mumbai to India's capital New Delhi was not allowed to board Monday's flight because her dress was too short, the Indian Express reported.
An official at IndiGo, who asked not to be named, told AFP that the dress had stopped above the knee, in violation of rules issued to employees and relatives of staff.
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The woman was formerly employed by the airline and was travelling on a special ticket because her sister worked for the company, the official said.
"Employees and the nominated family members are required to maintain a specific dress code, as and when they fly with the airline under the staff leisure travel privileges," read an IndiGo statement.
"Keeping in mind this policy, the Mumbai ground staff followed the protocol to brief this passenger on the dress code policy," it added.
The Indian national changed her attire and was allowed onto a later flight, the official said, stressing that the dress code was not for ordinary customers.
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IndiGo is India's only consistently profitable airline and commands almost 40 percent of its home market, the biggest share of any airline.
It is currently seeking to raise $460 million through an initial public offering.
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