The 50-year-old succeeds Luiz Felipe Scolari to return for his second stint with the Selecao after a largely successful four years in charge between 2006 and 2010Brazil's football federation (CBF) has confirmed the appointment of Dunga as the new Brazil coach.
The 1994 World Cup-winning captain returns for what will be his second stint in charge of the Selecao, having spent four years at the helm between 2006-2010.
He succeeds Luiz Felipe Scolari, who left the post after failing to claim Brazil's first World Cup on home soil following a humbling 7-1 defeat to Germany in the semi-finals.
At his unveiling, Dunga stressed the importance of being level-headed about the Selecao's standing in world football and insists that the national team will not stumble upon Pele-esque players often.
"The national team still represents a lot," the new Brazil boss told reporters. "And we're going to win back that pride through results, showing how much we want to do the best.
"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 for being the best, but we need to be humble enough to understand that other teams have worked a lot to get where they are. We need to work very hard to earn the right to be amongst the best. we can't sell to the fans the illusion that things will improve overnight.
"We can't think that we're going to stumble upon a Pele all the time. We can't try to have a new idol every day. We need to put together talent and humility.
"Football is no longer a game of one or two star figures. It takes the active participation of all the players."
In Dunga's previous spell in charge of his country, he won 42 and lost just six of his 60 games, guiding them to the Copa America 2007 and Confederations Cup 2009 titles, but was criticised for his pragmatic approach.
The 50-year-old was fired from what was his first senior coaching role in 2010 after suffering a World Cup quarter-final defeat to the Netherlands.
Dunga’s only other experience in the dugout came at Brazilian club Internacional last year, but he lasted less than 12 months before being dismissed after suffering four straight league defeats.
His first Brazil squad will be announced in late August ahead of the Selecao’s Gillette Brasil Global Tour friendly fixtures with Colombia and Ecuador in the United States.