The CBF on Monday announced the resignation of Scolari and his assistant Parreira following the team's ignominious World Cup exit. (Agencies)
Media reports have claimed the CBF is considering a foreign coach for the first time but Parreira warned the move would backfire.
"Great teams have to have a local coach," Parreira said.
"If somebody from another country takes the job, he is going to suffer a lot. And when he starts to get it, it will be too late,” he added.
“I'm not against the idea but I think it will be difficult for a foreign coach to implement his ideas. In six matches, if he loses three, people are going to criticise him. I think there are competent people here who can do the job,” he said.
Scolari's decision to step down followed the Selecao's 7-1 World Cup semifinal defeat to Germany and subsequent 3-0 loss to the Netherlands in the match for third place.
Former Corinthians coach Tite is considered favorite for the vacant position while Sao Paulo manager Muricy Ramalho has also been mooted.
Parreira said England had shown the perils of appointing a foreign coach.
"Sven-Goran Eriksson was a failure and Fabio Capello was an even bigger failure," Parreira said, adding that Brazil's chief concern should be the need to invest in youth development.
"Brazil always developed young players, we have to go back to doing that," he said.
"We need to work harder at developing youth football and produce high-level players. Players are leaving too early. They currently complete their football development in other countries,” he added.
The CBF on Monday announced the resignation of Scolari and his assistant Parreira following the team's ignominious World Cup exit.