Dengue virus (DENV) infection remains a major public health concern in many parts of the world, including Southeast Asia and the Americas. Sri Lanka experienced its largest dengue outbreak in 2017. Neurological symptoms associated with DENV infection have increasingly been reported in both children and adults. Here, we characterize DENV type 2 (DENV-2) strains, which were isolated from cerebrospinal fluid (CSF) and/or serum of patients with dengue encephalitis. Acute serum and CSF samples from each patient were subjected to dengue-specific non-structural protein 1 (NS1) antigen test, IgM and IgG enzyme-linked immunosorbent assay (ELISA), virus isolation, conventional and real-time polymerase chain reaction (PCR), and next-generation sequencing (NGS). Among the 5 dengue encephalitis patients examined, 4 recovered and 1 died. DENV-2 strains were isolated from serum and/or CSF samples of 3 patients. The highest viral genome levels were detected in the CSF and serum of the patient who succumbed to the illness. A phylogenetic tree revealed that the DENV-2 isolates belonged to a new clade of cosmopolitan genotype and were genetically close to strains identified in China, South Korea, Singapore, Malaysia, Thailand, and the Philippines. According to the NGS analysis, greater frequencies of nonsynonymous and synonymous mutations per gene were identified in the nonstructural genes. The full genomes of serum- and CSF-derived DENV-2 from the same patient shared 99.7% similarity, indicating that the virus spread across the blood-brain barrier. This is the first report to describe neurotropic DENV-2 using whole-genome analysis and to provide the clinical, immunological, and virological characteristics of dengue encephalitis patients during a severe dengue outbreak in Sri Lanka in 2017.