Background: Comprehensive, longitudinal field studies that monitor both disease and vector populations for dengue viruses are urgently needed as a pre-requisite for developing locally adaptable prevention programs or to appropriately test and license new vaccines. Methodology and Principal Findings: We report the results from such a study spanning 5 years in the Amazonian city of Iquitos, Peru where DENV infection was monitored serologically among ~2,400 members of a neighborhood-based cohort and through school-based absenteeism surveillance for active febrile illness among a subset of this cohort. At baseline, 80% of the study population had DENV antibodies, seroprevalence increased with age, and significant geographic variation was observed, with neighborhood-specific age-adjusted rates ranging from 67.1 to 89.9%. During the first 15 months, when DENV-1 and DENV-2 were co-circulating, population-based incidence rates ranged from 2-3 infections/100 person-years (pyears). The introduction of DENV-3 during the last half of 2001 was characterized by 3 distinct periods: amplification over at least 5-6 months, replacement of previously circulating serotypes, and epidemic transmission when incidence peaked at 89 infections/100 p-years. Conclusions/Significance: Neighborhood-specific baseline seroprevalence rates were not predictive of geographic incidence patterns prior to the DENV-3 introduction, but were closely mirrored during the invasion of this serotype. Transmission varied geographically, with peak incidence occurring at different times among the 8 geographic zones in ~16 km2 of the city. The lag from novel serotype introduction to epidemic transmission and knowledge of spatially explicit areas of elevated risk should be considered for more effective application of limited resources for dengue prevention.