Called Cota Coca, the ruins are in south-east Peru, about 50 kilometres southwest of the well-known Inca site of Machu Picchu in the Andes.
British writer and explorer Hugh Thomson said the site, more of a settlement than what we would understand as a city, was in a "remarkable state of preservation".
Mr Thomson, a co-leader of the expedition, said: "You're only going to find a new Inca site once in your life."
Britain's Royal Geographical Society says Cota Coca's "constructed area" is more than twice as large as any found at the other Incan ruin whose discovery was announced just a few months ago.
Thirty buildings
The ruins include about 30 stone buildings around a central plaza. One structure, believed to be a large meeting hall or barracks, measures longer than 20 metres.
"This is an important discovery, because it is a sizeable centre of good-quality late-Inca masonry," said John Hemming, a well-known Inca expert and former director of the Royal Geographical Society.
But the newly discovered site is extremely remote, hidden at the bottom of a near-inaccessible river canyon in dense jungle.
The expedition was co-led by Mr Thomson and by American archaeologist Gary Ziegler, who began looking for the site after a tip from a mule-handler.
The pair plan to return to the area next year to look for even more ruins that may be hidden nearby.
Remote jungle
Cota Coca, at 1,850 metres above sea level, is located on a plateau near where the Yanama and Blanco rivers meet in a deep canyon.
The river and valley have become impassable, so the expedition had to approach the city from the mountains above, trekking for five days from the nearest trailhead into thick jungle.
"Getting there was quite something," Mr Thomson said.
In Inca times, the explorers say, there may have been a road linking Cota Coca to another of the great Inca cities, Choquequirao.
And Cota Coca is likely one of the places to which fleeing Incas retreated from the Spanish in 1532, before their total defeat about 40 years later.
The "coca" in the name may refer to the coca leaf, which could have been grown there and which only Inca nobles were allowed to chew as a natural stimulant, Mr Thomson said.