The 50-year-old’s return to the national team was confirmed by Brazil football federation (CBF) president Jose Maria Marin at a press conference on Tuesday.
Dunga, who succeeds former coach Luiz Felipe Scolari, previously led the Selecao into World Cup 2010 and says he and his new team will win back the faith of the Brazilian public through hard work and a strong team ethic.
"The national team still represents a lot," he said. "And we're going to win back that pride through results, showing how much we want to do our best.
"We already have a plan, but the media and the fans already know me. I won't be selling a dream. I'll sell them the reality. And the reality is that we need a lot of work.
"We can't keep thinking that we're the best. We were the best, we have talent to be the best, but we need to be humble enough to understand that other teams have worked very hard to get where they are today."
The 1994 World Cup-winning captain led Brazil to Copa America and Confederations Cup triumphs in a four-year coaching spell between 2006 and 2010 before leaving his post following a World Cup quarter-final defeat to Netherlands and lost just six of his 60 matches in charge.
And he believes the collective must reign supreme over the individual if Brazil are to climb back to the top of world football.
"A goalkeeper saving a ball is also art, a centre-back recovering a ball is also art,” he said.
"We can't think that we're going to stumble upon a Pele all of the time. We can't try to have a new idol every day. Brazil have always had great players and great talent. We need to combine our talent and our humility to find a balance."
Dunga’s first squad is due to be announced next month ahead of September’s friendlies with Colombia and Ecuador in the USA.