Dating back 14,000 years, the discovery changes the way prehistorians have viewed the early cultural and economic development of humanity.
The discovery - published in the current issue of the US magazine Science - shows for the first time that pre-agricultural Stone Age humans were able to survive and flourish in equatorial rain forest conditions.
This suggests that vast tracts of forest in Africa, South-east Asia and Latin America are likely to have been inhabited long before academics had previously thought, thus extending the range of the human race's prehistoric habitable world by around 15 per cent.
The archaeologists have also succeeded in dating cave paintings on the site - Pedra Pintada near Santarem in Brazil - to 13-14,000 years ago, making them the oldest art works ever found in the New World.
The paintings - dated by hi-tech thermo-luminescence and calibrated radio- carbon dating - show fish, birds, deer and humans, apparently masquerading as insects, stars and comets.
One painting shows a figure with an insect-like head and body, but human limbs. Another bizarre creature is shown falling from the sky and has a human torso, a giant eye, and rays radiating from its head. Other compositions portray hunters with spears and spear throwers, and women having babies.
Similar paintings are scattered over hundreds of sites along a 30-mile stretch of the River Amazon.
The excavations - led by the US archaeologist Anna Roosevelt of Chicago's famous Field Museum of Natural History - have also revealed one of the oldest securely dated human occupation sites (also 14,000 years old) found in the New World.
Dr Roosevelt suspects that the prehistoric inhabitants of Pedra Pintada were among the first human colonists of South America and that vast numbers of other rock paintings elsewhere in Brazil are also likely to date from this early period.
"It was thrilling when we first reached the earliest occupation level in the cave. Now we plan to look for more sites - this time submerged under the waters of the Amazon," she said.
Huge aggregations of ancient domestic rubbish, mainly shellfish food debris, suggest people had permanent settlements in the New World more than 8,000 years ago - not that long after similar developments occurred in the Old World.