The vessel, 12-14 metres long, sunk with half a ton of freight of stone blocks in a flood surge 3,300 years ago. It is the first prehistoric boat to be found complete with its cargo.
At first workers at Shardlow Arc gravel quarry in Derbyshire thought the boat was an old tree trunk and during quarrying work it was broken into three parts.
But later Roger Selby, an excavator driver, realised that it was no ordinary log but a dugout canoe.
Archaeologists were called in and a second piece was found. So far 11 metres of the vessel have been recovered. The one missing piece, the stern, is thought to be between one and three metres long.
Experts say the boat would have been paddled or punted. Its pointed bow was 25 per cent higher than the rest of the vessel, a feature reminiscent of dugout canoes in the Pacific and in North America.
Over the past few centuries some 200 dugout canoes have been found in Britain, but most were medieval. The vessel is now being worked on by archaeologists led by Dr Chris Salisbury and Daryl Garton of Nottingham University.
Work on the site has revealed the existence of a prehistoric settlement, which was probably on an island.