A better description of the extent and structure of genetic diversity in dengue virus (DENV) in endemic settings is central to its eventual control. To this end we determined the complete coding region sequence of 187 DENV-2 genomes and 68 E genes from viruses sampled from Vietnamese patients between 1995 and 2009. Strikingly, an episode of genotype replacement was observed, with Asian 1 lineage viruses entirely displacing the previously dominant Asian/American lineage viruses. This genotype replacement event also seems to have occurred within DENV- 2 in Thailand and Cambodia, suggestive of a major difference in viral fitness. To determine the cause of this major evolutionary event we compared both the infectivity of the Asian 1 and Asian/American genotypes in mosquitoes and their viraemia levels in humans. Although there was little difference in infectivity in mosquitoes, we observed significantly higher plasma viraemia levels in paediatric patients infected with Asian 1 lineage viruses relative to Asian/ American viruses, a phenotype that is predicted to result in a higher probability of human-to-mosquito transmission. These results provide a mechanistic basis to a marked change in the genetic structure of DENV-2 and more broadly underscore that an understanding of DENV evolutionary dynamics can inform the development of vaccines and antiviral drugs.