Braz, 63, provided the sensual lead vocals for the international hit song released by French group Kaoma in 1989.
Police announced the arrest of three alleged perpetrators a few hours after her body was found charred inside a car in the coastal town of Saquerema near Rio de Janeiro.
Among the three men was Wallace de Paula Vieira, 23, her inn's manager, who was originally questioned as a witness but gave contradicting stories and ended up confessing to the crime.
The other two men were then arrested and found to be in possession of Braz's credit card and cell phone.
According to police, the three took advantage of the hotel being empty and stormed Braz's quarters. Braz tried to defend herself but was beaten and carried away in her own car, passed out.
After driving approximately one kilometer (mile) the car broke down and the thieves decided to set it on fire, leaving their victim inside.
Firefighters were initially called to put a fire out at the hotel, but then received a second report about a burning car nearby, where they found her charred body.
"La Lambada" sold 15 million copies in more than 100 countries, landing more than 80 gold and platinum records and earning hundreds of prizes worldwide, according to Braz's official website.
Braz lived in France for several years in the 1980s where her hit song was featured in an advertisement for the soft drink Orangina.
Braz's parents were both musicians and she started in the profession herself at the age of 13, before eventually performing with Brazilian greats such as Gilberto Gil and Caetano Veloso.
"It is sad. She was a warm and likeable person," said another Brazilian singer who knew her, Ricardo Vilas.
"But she was also fragile and suffered a lot of difficulties" with the tax authorities and an abusive husband, Vilas told AFP.
