Researchers from Germany and the US discovered the water snake's chameleon-like behaviour by accident when they put it into a dark bucket.
The environmental group WWF, which supports conservation work in Borneo, says wildlife in the region is threatened by deforestation.
It believes the newly described snake may exist only in one river basin.
Found in the Kapuas river in the Betung Kerihun National Park in Kalimantan (the Indonesian portion of Borneo), it belongs to the Enhydris genus of rear-fanged water snakes and has been named E. gyii.
It is about 50cm (18 inches) long, and venomous.
Bucket research
"The discovery of the 'chameleon" snake exposes one of nature's best kept secrets deep in the heart of Borneo"
It was Dr Auliya, a consultant for WWF, who discovered serendipitously its colour-changing capacity.
"I put the reddish-brown snake in a dark bucket," he said. "When I retrieved it a few minutes later, it was almost entirely white."
The reasons why it has evolved this attribute are unclear. The chameleon, possibly the animal kingdom's most famous colour-changer, is believed to alter its hue depending on mood and temperature.
In the last 10 years, more than 350 new animal and plant species have been discovered on Borneo.
"The discovery of the 'chameleon' snake exposes one of nature's best kept secrets deep in the heart of Borneo," said Stuart Chapman, WWF's international coordinator for the island.
The environmental group warns that the home of the new snake is threatened, as Borneo's forest cover has declined from 75% in the mid-1980s to about 50% today.
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