More than 200 people a year die after taking an overdose of the painkiller.
Most die of liver failure because they receive the only existing antidote N-acetylcysteine too late.
N-acetylcysteine is ineffective if taken eight hours after an overdose and totally useless if taken 24 hours later.
A further 50,000 patients need hospital treatment, with half requiring admission taking up 80,000 bed days.
It is thought the new drug, Aladote, will still be effective even if taken up to 24 hours after an overdose.
Toxicology doctor Professor James Dear is conducting the first trial on 24 patients in Edinburgh later this year.
Swedish manufacturer PledPharma hopes the drug could be fast-tracked for use within three years.
Dr Dear, of the University of Edinburgh, said: “During the first 24 hours after poisoning people usually experience few or no symptoms.
“Therefore, many patients come to hospital at such a late stage that the current standard treatment is not sufficient to prevent acute liver failure.
“It only limits the damage if we get in early, but sadly in many cases people don’t know they have overdosed or, if they do, they are not aware of the urgency of getting help.
“Once the liver has been damaged beyond a certain point there is no road back apart from a liver transplant.
“Patients die waiting for an urgent transplant or became so rapidly ill it is too late to consider the possibility.”
Paracetamol is the most commonly used drug in the world for the treatment of fever and pain. It is the drug most commonly overdosed on in Britain.
Many people accidentally overdose on it, usually by taking multiple medicines without realising that they all contain paracetamol.
Professor Dear said: “It is distressing to be faced with a person whose liver has been wrecked and there is nothing we can do.
“The message to anyone who thinks they have taken an overdose is to get to A&E as quickly as possible.
“If it happens late in the evening, don’t think that waiting until morning will be OK. That sort of delay could be fatal. The toxic effect on the liver often occurs before the symptoms.”
The active ingredient in Aladote is already licensed as a treatment to prevent nerve damage in chemotherapy.
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