Modern Europeans have inherited about 4 per cent of their genes from Neanderthals, meaning the two groups mated at some point in the past, researchers said.
The discovery in Manot Cave in Israel's West Galilee challenges a previous hypothesis that the two species potentially met 45,000 years ago somewhere in Europe.
"It has been suspected that modern man and Neanderthals were in the same place at the same time, but we didn't have the physical evidence. Now we do have it in the new skull fossil," said Bruce Latimer, from Case Western Reserve University (CWRU) in US.
The Manot cave is located in the region where Neanderthals periodically lived, perhaps when ice sheets in Europe forced them to migrate to warmer locales, like the Levant region.
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The cave is situated along the only land route available for ancient humans to travel out of Africa to the Middle East, Asia and Europe.
"Modern humans and Neanderthals likely encountered each other foraging for food," Latimer said.
The partial cranium, covered in a patina of minerals produced by the wet conditions within the cave, allowed researchers from the Geological Survey of Israel to use uranium-thorium dating techniques and determine that the skull was between 50,000 to 60,000 years old.
In particular, he was interested in the cranium's bony formation called the occipital bun on the back of the skull.
While its purpose is unknown, the Neanderthal's bun looks much like a bony hot dog bun with a groove down the centre. This feature was absent in the Manot fossil, and is also typically missing in modern humans.
The fossil's gender is unknown because it's missing the brow ridge, one marker for gender differences. Because the skull is from an adult, CWRU researchers know it is not related to other sub-adult human teeth and bones also found in the cave, according to Mark Hans, chair of CWRU's Department of Orthodontics.