The vaccine is being developed to combat the four closely related strains of dengue viruses that have been identified around the world, the Butantan institute said in a statement.
Brazil is frequently afflicted with the disease, which is spread by the mosquito Aedes aegypti.
Work on the vaccine began in 2005 in partnership with the US National Institutes of Health (NIH), Butantan said.
In a first phase, the vaccine was tested on animals and humans in the United States and produced a good immunological response, it noted.
The second phase is to begin in October with clinical tests on 300 Brazilian volunteers, all healthy adults aged between 18 and 59 of both sexes, over a five-year period.
The institute said the vaccine is expected to be ready by 2018.
"This new phase is very important because it will be adapted to the particular characteristics of the Brazilian population," said Butantan Director Jorge Kalil.
"The production of a Brazilian vaccine for dengue fever is a major advance for public health," said Sao Paulo state health secretary Giovanni Guido Cerri.
"We are making major strides toward producing a safe, effective and low-cost vaccine which can be incorporated into the National Immunization Program and meet the entire Brazilian demand."
Dengue fever affects between 50 and 100 million people in the tropics and subtropics each year, causing fever, muscle and joint ache as well as potentially fatal dengue hemorrhagic fever and dengue shock syndrome.
Researchers estimate that around three billion people in the world live in regions susceptible to dengue contagion and another 20 million tourists pass through them.
Butantan, which has a long tradition of research on snakes and poisonous animals, is the leading domestic producer of anti-venom sera and vaccines.