Brazil's health ministry said that the move will not only aid the fight against the disease but will also help preserve the world's largest rainforest.
It is also hoped that producing condoms from the rainforest will cut the South American country's reliance on imported contraceptives, which are given away free as part of a government programme to fight Aids.
A state-run factory in the north-western state of Acre will produce 100 million of the 'Natex' condoms every year.
Brazilian officials said that the factory would generate income for Amazon residents, benefiting at least 500 families and providing 150 jobs in Xapuri, a small Amazonian town with a population of around 15,000 people.
They claim that making the condoms will not put the region's wildlife under threat as the process involves using a product which is widely available and does not require workers to destroy large sections of the rainforest.
The health ministry says that the 'Natex' condoms are the only condoms in the world made of latex harvested from a tropical forest, and will reduce the country's reliance on foreign imports.
Brazil is the world's largest single buyer of condoms, with the government purchasing more than a billion of the contraceptives in recent years as part of the country's national programme to combat Aids.
Catholic bishops have been critical of the government's programme, saying that it encourages promiscuity.
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