The first approved dengue vaccine has now been licensed in six countries. We propose that this live attenuated vaccine acts like a silent natural infection in priming or boosting host immunity. A transmission dynamic model incorporating this hypothesis fits recent clinical trial data well and predicts that vaccine effectiveness depends strongly on the age group vaccinated and local transmission intensity. Vaccination in low-transmission settings may increase the incidence of more severe "secondary-like" infection and, thus, the numbers hospitalized for dengue. In moderate transmission settings, we predict positive impacts overall but increased risks of hospitalization with dengue disease for individuals who are vaccinated when seronegative. However, in high-transmission settings, vaccination benefits both the whole population and seronegative recipients. Our analysis can help inform policy-makers evaluating this and other candidate dengue vaccines.