The lost city is high in the Andes
The ruins, about 40 kilometres (25 miles) from the Inca citadel of Machu Picchu, are in an area where an Inca army held out against the 16th Century invaders.
The expedition leader, British explorer Peter Frost, said the site was the biggest of its kind found since 1964 and could have been occupied by the Incas when they took to the hills after the Spanish conquest.
Sacred platform
It may also hold evidence that could shake up theories of Inca expansion and may force scholars to rethink their ideas about when the Incas first expanded their empire.
"It's a jigsaw puzzle. What we're finding are more pieces... to get a better sense of what was happening in that area," Mr Frost said.
At the site, called Corihuayrachina, explorers found signs of a well-developed and sophisticated settlement, including a heavily looted, but still spectacular, sacred ceremonial platform.
Hidden in thick forest on Mount Victoria in the remote Vilcabamba region, the ruins so far consist of 12 sites with more than 100 structures, including circular homes, storehouses, cemeteries, funeral towers, roadways, waterworks, farming terraces, a dam and a truncated pyramid.
Tough terrain
In spite of the looting which the explorers say took place over 60 years ago, pottery, stone instruments and human remains have been found, and archaeologists hope to make further discoveries.
The Incas once ruled a vast part of South America stretching from Colombia to Chile, but Spanish conqueror Francisco Pizarro and his band of treasure hunters brought that empire to an end in 1533.
An Inca army of 50,000 moved to the more remote area and held out against the invaders for nearly 40 years.
The city, which the Incas may have taken over from other tribes, was built around an ancient silver mine which was exploited by locals until the 1970s. Its ruins are now used as grazing land.
Peter Frost first spotted it when he and a colleague were hiking on a nearby ridge in 1999. But its remote location and tough terrain meant it took them another two years to organise the first expedition.