Wearing the captain's armband for the first time since March last year, Neymar dazzled after scoring his 52nd international goal in Sao Paulo on Tuesday.
Philippe Coutinho opened the scoring 10 minutes prior to the break at Arena Corinthians, combining with Paulinho, before Neymar added a second in the 64th minute after missing a second-half penalty.
And Marcelo sealed a ninth successive victory for Tite's CONMEBOL leaders with four minutes remaining.
Unbeaten since Tite replaced Dunga after last year's Copa America Centenario - keeping seven clean sheets during that run - Brazil moved nine points clear in the South American standings as Uruguay faced Peru in Tuesday's late fixture.
Brazil were forced into one change for the visit of Paraguay, with full-back Dani Alves suspended following last week's 4-1 win in Uruguay. Fagner replaced the Juventus star.
Francisco Arce brought in Rodrigo Rojas, Hernan Perez and Derlis Gonzalez for Victor Caceres, Dario Lezcano and Juan Iturbe after Paraguay edged Ecuador 2-1 last time out.
Neymar was a clear target for Paraguay during the early exchanges, fouled on several occasions but the star man dusted himself off and got on with the job, almost setting up the opener in the sixth minute following a teasing delivery to Paulinho.
Paraguay impressed defensively and in attack, refusing to allow Brazil time on the ball and the visitors should have taken the lead seven minutes later when Gonzalez moved through on goal after some sloppy play from Miranda but the Dynamo Kiev forward scuffed his shot.
Brazil finally broke Paraguay's stubborn resistance 10 minutes before the break via Coutinho. After checking inside and playing a neat one-two with Paulinho, the Liverpool star guided the ball beyond Antony Silva from the top of the penalty area.
The hosts came out all guns blazing in the second half and almost doubled the lead in the 49th minute but Paulinho was unable to add to last week's hat-trick - firing his volley wide of the post.
A sliding Neymar then collided with the post, wasting a golden opportunity after being picked out by Coutinho.
Neymar was in the thick of the action again moments later after winning a contentious penalty but his spot-kick was easily saved by Silva.
But Neymar eventually made up for his penalty miss just past the hour-mark. After dazzling his way through Paraguay's defence, his shot beat Silva, albeit with some help from a deflection as he moved within three goals of Romario for third place in Brazil's all-time goalscorers list.
Full-back Marcelo capped the result with a delicate lofted effort over Silva with the outside of his boot in the closing stages.