Dengue viruses cause severe and sudden human epidemics worldwide. The secreted form of the nonstructural protein 1 (sNS1) of dengue virus causes vascular leakage, a hallmark of severe dengue disease. Here, we reverse engineered the T164S mutation of NS1, associated with the severity of dengue epidemics in the Americas, into a dengue virus serotype 2 mildly infectious strain. The T164S mutant virus decreased infectious virus production and increased sNS1 production in mammalian cell lines and human peripheral blood mononuclear cells (PBMCs) without affecting viral RNA replication. Gene expression profiling of 268 inflammation-associated human genes revealed up-regulation of genes induced in response to vascular leakage. Infection of the mosquito vector Aedes aegypti with the T164S mutant virus resulted in increased viral load in the mosquito midgut and higher sNS1 production compared to wild-type virus infection. Infection of type 1 and 2 interferon receptor-deficient AG129 mice with the T164S mutant virus resulted in severe disease coupled with increased complement activation, tissue inflammation, and more rapid mortality compared to AG129 mice infected with wild-type virus. Molecular dynamics simulations predicted that mutant sNS1 formed stable dimers similar to the wild-type protein, whereas the hexameric mutant sNS1 was predicted to be unstable. Immunoaffinity-purified sNS1 from T164S mutant virus-infected mammalian cells was associated with different lipid classes compared to wild-type sNS1. Treatment of human PBMCs with sNS1 purified from T164S mutant virus resulted in a twofold higher production of proinflammatory cytokines, suggesting a mechanism for how mutant sNS1 may cause more severe dengue disease.