Abstract The investigation of the brain’s functional connectome and its dynamic changes can provide valuable insights into brain organization and its reconfiguration. However, the analysis of dynamic functional connectivity (dFC) using functional magnetic resonance imaging (fMRI) faces major challenges, including the high dimensionality of brain networks, unknown latent sources underlying observed dFC, and the large number of brain connections that increase the risk of spurious findings. In this paper, we propose a new regularized blind source separation (BSS) method called dyna-LOCUS to address these challenges. dyna-LOCUS decomposes observed dFC measures to reveal latent source connectivity traits and their dynamic temporal expression profiles. By utilizing low-rank factorization and novel regularizations, dyna-LOCUS achieves efficient and reliable mapping of connectivity traits underlying the dynamic brain functional connectome, characterizes temporal changes of the connectivity traits that contribute to the reconfiguration in the observed dFC, and generates parsimonious and interpretable results in identifying whole-brain dFC states. We introduce a highly efficient iterative Node-Rotation algorithm that solves the non-convex optimization problem for learning dyna-LOCUS. Simulation studies demonstrate the advantages of our proposed method. Application of dyna-LOCUS to the Philadelphia Neurodevelopmental Cohort (PNC) study unveils latent connectivity traits and key brain connections and regions driving each of these neural circuits, reveals temporal expressions and interactions of these connectivity traits, and generates new findings regarding gender differences in the neurodevelopment of an executive function-related connectivity trait.