The Public Prosecutor's Office in the state of Para said on its website that the Xingu Alive Forever group claims that the Belo Monte Construction Consortium paid the person 5,000 reals ($2,500) a month to tape meetings and photograph and identify group members.
The activist group said on its own website that the alleged spy confessed after being caught Sunday taping the organization's annual planning meeting.
The consortium hired the alleged spy last October to "identify leaders among the workers who could organize strikes," Xingu Alive Forever said. Two months later, the activist group said, the spy was ordered to "infiltrate the group, attend its meetings and monitor its participants."
The consortium's press office said it had no immediate comment because it had not been officially notified of the investigation.
An official of the prosecutor's office said the consortium could "be charged with committing a crime against the right of workers to organize themselves."
"If found guilty, those responsible could face jail terms of up to one year and slapped with fines to be set by a judge," she added. She spoke on condition of anonymity because she was not authorized to speak to the news media.
The $11 billion, 11,000-megawatt Belo Monte dam, on the Xingu River feeding the Amazon, will be the world's third-largest hydroelectric energy producer behind China's Three Gorges dam and the Itaipu dam, which straddles the Brazil-Paraguay border.
The government has said it will be a source of clean, renewable energy, and damage to the environment would be minimized.
But environmentalists and indigenous groups say the dam would devastate wildlife and the livelihoods of 40,000 people who live in the area to be flooded.