Anatel, the government agency that regulates the telecom sector in Brazil, said it's working with federal police and other government agencies on the investigation.
The O Globo newspaper reported this weekend that information released by the National Security Agency leaker Edward Snowden showed Brazil is the top target in Latin America for the NSA's massive intelligence-gathering effort aimed at monitoring communications around the world.
Brazil isn't alone in its concern; London-based advocacy group Privacy International filed lawsuit on Monday over alleged spying of internet and phone users in Britain. Earlier, official in Germany, France, Hong Kong and other nations lodged complaints.
Brazilian President Dilma Rousseff the nation would raise the issue at the 193-country U.N. International Telecommunications Union and also at the U.N. Commission on Human Rights since the "fundamentals" of human rights include "freedom of expression and the right to privacy."
"If there was any involvement of other countries, of other businesses that aren't Brazilian, then it's certainly a violation of our sovereignty, without a doubt, just like it's a violation of human rights," Rousseff said. "Now, we have to look at things without pre-judgment, we have to investigate."
Brazilian regulator Anatel said in its statement that "it's worth clarifying that the confidentiality of data and telephone communications is a right guaranteed by the constitution, by our laws and by Anatel's regulations. Its violation is punishable in civil, criminal and administrative realms."
The O Globo article said the NSA collected the data through an undefined association between U.S. and Brazilian telecommunications companies. It said it could not verify which Brazilian companies were involved or if they were aware their links were being used to collect the data.
On Monday, O Globo reported that the U.S. had a significant data center in Brasilia for the collection of intercepted global satellite communications until at least 2002, based upon the Snowden document it's seen. The documents didn't indicate if that still exists.
Communications Minister Paulo Bernardo told reporters in Brasilia that he "has no doubt whatsoever" Brazilian citizens and institutions were spied upon.
"Even the European Parliament was monitored you think that we weren't?" he said. "We have to verify the circumstances in which this occurred, the exact way and when."
Bernardo met Monday afternoon with U.S. Ambassador Thomas Shannon.
"He denied that there is such monitoring here in Brazil, he said that there never was a data center and that there is no agreement with Brazilian companies to collect data in Brazilian territory," Bernardo said afterward, according to the state-run Agencia Brasil news agency.
The O Globo article printed Sunday said that "Brazil, with extensive digitalized public and private networks operated by large telecommunications and internet companies, appears to stand out on maps of the U.S. agency as a priority target for telephony and data traffic, alongside nations such as China, Russia and Pakistan."
The report did not describe the sort of data collected, but the U.S. programs appear to gather what is called metadata: logs of message times, addresses and other information rather than the content of the messages.
U.S. journalist Glenn Greenwald, who lives in Rio de Janeiro and originally broke the Snowden story in the Britain-based Guardian newspaper, where he writes a regularly blog, co-authored the Sunday report in O Globo.
In an interview with the Globo TV network, Greenwald said the Snowden documents show that the U.S. was using Brazil as a "bridge" to gather data on better-protected states where it cannot gain direct access, but whose traffic may pass through Brazil.
"We don't have access to China's system, but we have access to Brazil's system," Greenwald said, speaking Portuguese. "So, we collect the traffic in Brazil not because we want to know what one Brazilian is saying to another Brazilian, but because we want to know what someone in China is saying to somebody in Iran, for example."
Brazil's Foreign Minister Antonio Patriota expressed "deep concern" about the monitoring of Brazil and demanded explanations from U.S. diplomats. On Monday, he said the conversations with the Americans were "encouraging" but that "we need to deepen the discussions."
Patriota reiterated that Brazil was looking at how to take measures at the United Nations "that would guarantee not just privacy, but also the respect and the citizenship of states when it comes to the use of information technology and cyber security."
In Washington, the U.S. State Department declined to comment on the alleged intelligence activity.
"As a matter of policy, we have been clear that the United States does gather foreign intelligence of the type gathered by all nations. I can tell you that we have spoken with Brazilian officials regarding these allegations," said State Department spokeswoman Jen Psaki. "We plan to continue our dialogue with the Brazilians through normal diplomatic channels. But those are conversations that, of course, we would keep private."
Associated Press writer Deb Riechmann in Washington contributed to this report.