There is clear evidence that BCG protects against leprosy, but cross-immunity with environmental mycobacteria can interfere with vaccination protection. Some have cast doubts whether BCG vaccination can offer a significant impact against leprosy in the Brazilian Amazon, which is an endemic area for leprosy and with a high prevalence of environmental mycobacteria. This study was designed to estimate the vaccine effectiveness of neonatal BCG against leprosy in Amazon region, in Brazil. This is a cohort study nested in a randomized community trial. The study had two main results. First, neonatal BCG vaccination in Brazilian Amazon elicited protection of 74% (95% CI 57-86) against all forms of leprosy cases. Second, the highest protection was observed for multibacillary cases, 93% (95% CI 71-98). It is concluded that the study provides evidence that neonatal BCG may have an important and overlooked impact on the occurrence and transmission of leprosy, maybe even more in the future when the cohort which received a high coverage of BCG reaches the age of high incidence of leprosy.