The sitter was not, as has long been thought, an obscure ballerina called Nelly Franklin. It has now been identified as a likeness of the wife of one of his artistic peers - and possibly the master French impressionist's only depiction of an Englishwoman.
Curators of a major exhibition at Tate Britain, at which the work will be displayed, now believe the image is of Ellen Cobden Sickert, an early figure in the women's movement and the wife of the British painter Walter Sickert.
Although regularly catalogued as a portrait of Franklin, the picture, known as Unhappy Nelly, actually disappeared from public view into a private collection and only recently came to light when it was acquired by the Museum of Montserrat. Richard Thomson, co-curator of the Tate exhibition, spotted it while on holiday and brought back a postcard.
His colleague Anna Robins, who had been rifling through archives, documents and photographs to put the exhibition together, immediately recognised the picture was of Ellen.
As well as the likeness, Ms Robins noted the loose tunic of the woman in the painting was like those worn by figures in the suffrage movement and what appeared to be the same locket was worn in a photo of Ellen and in the Degas.
She said: "It's a great find and it was a real moment of serendipity. Because I had various photographs of Sickert's wife I instantly recognised it as her. There's absolutely no doubt that it is her. Although her name was Ellen, her nickname was Nelly.
"No one had been aware that it was her because people were not aware of the extent to which Sickert and Ellen had been involved with Degas until we researched this show. Degas had actually developed a crush on her sister Jane."
The exhibition - Degas, Sickert and Toulouse-Lautrec: London and Paris 1870-1910 - explores the links between French and British artists of the period and how they shared ideas and techniques.
It gathers more than 100 works, with around 20 each from the three main figures on which it focuses. Among the many iconic images is Degas's L'Absinthe 1875-1876, lent by the Musée d'Orsay and not shown in London since the 19th century.
The works by Degas and Toulouse-Lautrec are those that are known to have been exhibited in British galleries at the time or were in British collections.
Degas, Sickert and Toulouse-Lautrec: London and Paris 1870-1910 opens on 5 October at Tate Britain and continues until 15 January