Dengue is an emerging arboviral disease and currently poses the greatest arboviral threat to human health. In recent decades, there has been a substantial increase in dengue outbreaks in many parts of the world including India. We performed an in-depth investigation of a major dengue outbreak in Andhra Pradesh, southern India in 2007 by serology, virus isolation, RT–PCR and genotyping. The results revealed an unusual emergence of dengue virus type 4 (DENV-4) along with the prevailing DENV-3. Phylogenetic analysis based on complete envelope gene of 182 globally diverse DENV-4 isolates demonstrated the involvement of a unique clade of genotype I of DENV-4 in the outbreak. This study also demonstrated a clear shift in the dominant serotype from DENV-3 to DENV-4 in India. This is the first report regarding the molecular characterization of Indian isolates of DENV-4, which has the potential to be involved in future outbreaks.