Background Dengue is one of the most common arboviral diseases prevalent worldwide and is caused by Dengue viruses (genus Flavivirus, family Flaviviridae). There are four serotypes of Dengue Virus (DENV-1 to DENV-4), each of which is further subdivided into distinct genotypes. DENV-2 is frequently associated with severe dengue infections and epidemics. DENV-2 consists of six genotypes such as Asian/American, Asian I, Asian II, Cosmopolitan, American and sylvatic. Comparative genomic study was carried out to infer population structure of DENV-2 and to analyze the role of evolutionary and spatiotemporal factors in emergence of diversifying lineages. Methods Complete genome sequences of 990 strains of DENV-2 were analyzed using Bayesian-based population genetics and phylogenetic approaches to infer genetically distinct lineages. The role of spatiotemporal factors, genetic recombination and selection pressure in the evolution of DENV-2 is examined using the sequence-based bioinformatics approaches. Results DENV-2 genetic structure is complex and consists of fifteen subpopulations/lineages. The Asian/American genotype is observed to be diversified into seven lineages. The Asian I, Cosmopolitan and sylvatic genotypes were found to be subdivided into two lineages, each. The populations of American and Asian II genotypes were observed to be homogeneous. Significant evidence of episodic positive selection was observed in all the genes, except NS4A. Positive selection operational on a few codons in envelope gene confers antigenic and lineage diversity in the American strains of Asian/American genotype. Selection on codons of non-structural genes was observed to impact diversification of lineages in Asian I, cosmopolitan and sylvatic genotypes. Evidence of intra/inter-genotype recombination was obtained and the uncertainty in classification of recombinant strains was resolved using the population genetics approach. Discussion Complete genome-based analysis revealed that the worldwide population of DENV-2 strains is subdivided into fifteen lineages. The population structure of DENV-2 is spatiotemporal and is shaped by episodic positive selection and recombination. Intra-genotype diversity was observed in four genotypes (Asian/American, Asian I, cosmopolitan and sylvatic). Episodic positive selection on envelope and non-structural genes translates into antigenic diversity and appears to be responsible for emergence of strains/lineages in DENV-2 genotypes. Understanding of the genotype diversity and emerging lineages will be useful to design strategies for epidemiological surveillance and vaccine design.