La Roja reached Sunday's showpiece by beating Italy on penalties in the semi-finals while the Selecao needed a late winner from Paulinho to send them through the last four at Uruguay's expense.
The Barcelona playmaker believes that victory would both confirm Spain's international dominance of late and give them a vital psychological boost over the coming 12 months against the tournament's hosts.
"It could be a very important step for them and for us too," Fabregas told AS. "We know that the only thing left for us to do is beat Brazil and if we achieve that we will give ourselves a new challenge to see if we can win the World Cup again.
|CONFEDERATIONS CUP LATEST
|10/1||Cesc Fabregas is 10/1 with BetVictor to score the first goal in Brazil v Spain
"They are the best national team of all time because of everything they've won and it would be amazing to beat them. It's the dream final. None of us have ever played against Brazil and there’s no better game for this generation of players."
However, Fabregas is wary of the dangers that come with playing against a side with significant home support and hinted his perception that their status as world No.1 is working against them.
"In every stadium we've played in, the crowd have wanted us to lose," the ex-Arsenal skipper noted.
The 26-year-old also had words of praise for new Barca team-mate Neymar, who has been widely considered to be one of the players of the tournament, while also hailing Liga full-backs Dani Alves and Marcelo for their ability to attack.
"Neymar's a great player, he's unpredictable, decisive, he's great at dribbling, has a great pass and reads the game well," he continued. "I like him.
"Alves and Marcelo are two secret weapons because, if the team can't create, then they are the ones that drive their teams forward and attack. They are both brilliant full-backs."