Named after the Araguaia River where it was found, the species is only the fifth known of its kind in the world.
Writing in the journal Plos One, the researchers say it separated from other South American river species more than two million years ago.
There are believed to be about 1,000 of the creatures living in the Araguaia river basin.
River dolphins are among the world’s rarest creatures.
According to the IUCN, there are only four known species, and three of them are on the Red List, meaning they are critically endangered.
These dolphins are only distantly related to their seafaring cousins, tending to have long beaks which let them hunt for fish in the mud at the bottom of rivers.
One of the best known species, the Yangtze River dolphin or baiji is believed to have gone extinct in about 2006.
South America though is home to the Amazon River dolphin, also known as the pink dolphin or boto, said to be the most intelligent of all the river species.
The new discovery is said to be related to the Amazonian, although scientists believe the species separated more than two million years ago.
The scientists say there are some differences in the number of teeth and they suspect the Araguaia River species is smaller, but most of the clues to their separate nature were found in their genes.
By analyzing DNA samples from dozens of dolphins in both rivers, the team concluded the Araguaia River creature was indeed a new species.
The researchers acknowledge though that some experts may question whether or not the discovery is in fact, wholly distinct.
Dr. Tomas Hrbek, from the Federal University of Amazonas said: “We looked at the mitochondrial DNA which is essentially looking at the lineages, and there is no sharing of lineages.
“The groups that we see, the haplotypes, are much more closely related to each other than they are to groups elsewhere. For this to happen, the groups must have been isolated from each other for a long time.
The researchers propose that the new species be called the Araguaian Boto, or Boto-do-Araguaia.
They estimate that there are about 1,000 of these creatures living in the river that flows northward for more than 2,600km to join the Amazon.
The researchers are concerned about the future for the new dolphin, saying that it appears to have very low levels of genetic diversity.
They are also worried because of human development.
“Since the 1960s the Araguaia river basin has been experiencing significant anthropogenic pressure via agricultural and ranching activities, and the construction of hydroelectric dams,” the authors write in their study.
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