Mano Menezes has taken the vacant managerial position of the Brazilian national team.
The Corinthians boss was approached following Fluminense coach Muricy Rumalho's snub of the five-time world champions.
Menezes will replace Dunga, who was sacked after his initially impressive Brazil team grinded to a halt at the quarter-final stage of the World Cup this summer with a 2-1 exit at the hands of Holland.
"What determined the choice was the understanding that immediate renovation is needed in the Brazilian national team," president Ricardo Teixeira said in a statement on the Brazilian football federation's official website.
"I talked with many people, watched the debates in various sports programs and I also heard fans to come up with three names.
"The most important thing in our selection was the common sense of the need of a philosophy of renovation.
"I have absolute confidence that this will be successfully done by 2014."
Menezes shot to prominence in 2005 by guiding Gremio into the Brazilian top flight before leading them to the final of the Copa Libertadores two years later.
He took charge at Corinthians in late 2007, taking the club to promotion from Campeonato Brasileiro Serie B before winning the Campeonato Paulista and Copa do Brasil last year.
Earlier, Ramalho turned down the opportunity with his club claiming his expected appointment was nothing but a 'short horror film'.
A CBF statement confirmed the decision later on Friday, saying: "The CBF invited Muricy Ramalho on Friday morning to be the coach of the Brazilian national team.
"By late afternoon, Muricy Ramalho replied saying he could not accept the invitation, because he has not been released from his Fluminense contract."
Ramalho's contract runs until the end of the season and was thought to include a clause which allows for his release in the case of him being offered the Brazil job.
However, Ramalho is now expected to pen a new deal with Fluminense until 2012.