In 2019–2020, dengue virus (DENV) type 4 emerged to cause the largest DENV outbreak in Paraguay’s history. This study sought to characterize dengue relative to other acute illness cases and use phylogenetic analysis to understand the outbreak’s origin. Individuals with an acute illness (≤7 days) were enrolled and tested for DENV nonstructural protein 1 (NS1) and viral RNA by real-time RT-PCR. Near-complete genome sequences were obtained from 62 DENV-4 positive samples. From January 2019 to March 2020, 799 participants were enrolled: 253 dengue (14 severe dengue, 5.5%) and 546 other acute illness cases. DENV-4 was detected in 238 dengue cases (94.1%). NS1 detection by rapid test was 52.5% sensitive (53/101) and 96.5% specific (387/401) for dengue compared to rRT-PCR. DENV-4 sequences were grouped into two clades within genotype II. No clustering was observed based on dengue severity, location, or date. Sequences obtained here were most closely related to 2018 DENV-4 sequences from Paraguay, followed by a 2013 sequence from southern Brazil. DENV-4 can result in large outbreaks, including severe cases, and is poorly detected with available rapid diagnostics. Outbreak strains seem to have been circulating in Paraguay and Brazil prior to 2018, highlighting the importance of sustained DENV genomic surveillance.