It comes following the death of a pet shih tzu in Hertfordshire which died after catching the infection.
The disease is Leishmaniasis and is carried by female sand flies, which transmit it with their bite. It can be passed between dogs when an infected animal bites or wounds another.
It is also known to be a zoonotic disease, meaning it can be passed from animal to human.
Until now, it was common in Europe but unheard of in the UK. Vets are sounding the alarm following the death of the dog in England, warning pet owners to be on the alert for symptoms.
Three year old dog died
The three year old shih tzu that died had been with his owners since he was a puppy, and had shown no signs of the symptoms.
But vets suspected dog-to-dog transmission of the disease, and another dog in the household had been put down six months earlier due to developing a severe case of Leishmaniasis.
Writing in the British Medical Journal (BMJ), a team of vets said, "To the authors' knowledge, this is the first reported case of Leishmaniasis in the UK in a dog without a history of travel to an endemic area."
They added that all dog owners must be aware of the bug, and the signs their dog could have it, as increased travel and importation of dogs meant increased risk.
The vets wrote, "Leishmania-infected dogs may present an infection risk to other dogs, even in the absence of natural vectors, as direct transmission between dogs is possible."
Another dog diagnosed
The authors of the paper also warned that another dog - a fully vaccinated English pointer - has also been diagnosed with the infection in Essex
The dog had never travelled outside of the county, however its owners had travelled to Spain last summer.
The dog had never been in contact with another infected dog, so it is believed that the owners may have accidentally brought back sand flies from their holiday in their luggage or clothing.
Symptoms to watch out for include:
Severe weight loss
Loss of appetite
Scaling on the skin
Nodules on the skin surface
Long or brittle nails
Signs of renal failure - excessive peeing, thirst and vomiting
Transmission to humans
Leishmaniasis can infect humans in three different forms, however it is rare in this part of the world. Most cases have occurred in Brazil, East Africa and South East Asia.
The most lethal is visceral leishmaniasis, which is fatal in 95 per cent of cases and causes bouts of fever, weight loss and anaemia.
The most common form in humans is cutaneous leishmaniasis and causes skin lesions and ulcers.