Using satellite imagery, the institute said 6,418 sq km of Amazon forest was stripped in the 12 months before 31 July 2011 – the smallest area since annual measurements started in 1988.
The data continues an encouraging trend. Since the peak deforestation year of 2004, the rates of clearance have fallen by almost 75%.
"This reduction is impressive; it is the result of changes in society, but it also stems from the political decision to inspect, as well as from punitive action by government agencies," Rousseff said.
To mark World Environment Day, the Brazilian president also signed a number of other measures to expand existing parks, protect areas of biodiversity and recognise the land rights of indigenous communities.