Until now, paleontologists believed microraptors which were about the size of a modern day hawk, lived in trees where they preyed exclusively on small birds and mammals about the size of squirrels.
Researchers led by the University of Alberta discovered the new evidence of Microraptor's hunting ability from fossilised remains in China.
This is the first evidence of a flying raptor, a member of the Dromaeosaur family of dinosaurs to successfully prey on fish.
"Now we know that Microraptor operated in varied terrain and had a varied diet. It took advantage of a variety of prey in the wet, forested environment that was China during the early Cretaceous period, 120 million years ago," Persons said.
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Further analysis of the fossil revealed that its teeth were adapted to catching slippery, wiggling prey like fish.
Dinosaur researchers have established that most meat eaters had teeth with serrations on both sides which like a steak knife helped the predator saw through meat.
"Microraptor seems adapted to impale fish on its teeth. With reduced serrations the prey wouldn't tear itself apart while it struggled," said Persons.
"Microraptor could simply raise its head back, the fish would slip off the teeth and be swallowed whole, no fuss no muss," he said.