The fossil had been in the collections of Doncaster Museum and Art Gallery for more than 30 years until Dean Lomax, palaeontologist at The University of Manchester, uncovered its hidden secrets.
Dean first examined the fossil in 2008 when he noticed several abnormalities in the bone structure which made him think he had something previously unidentified.
Researchers identified several unusual features of the limb bones (humerus and femur) that were completely different to any other ichthyosaur known.
Similar-shaped to dolphins and sharks, ichthyosaurs, which are often misidentified as 'swimming dinosaurs', swam the seas of the Earth for millions of years during the Triassic, Jurassic and Cretaceous periods, before being wiped out.
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The fossil found on Dorsets Jurassic coast is between 189 and 182 million years old, from a time in the early Jurassic period called the Pliensbachian. It is the world's most complete ichthyosaur of this age, researchers said.
"The recognition of this new species is very important for our understanding of ichthyosaur species diversity during the early Jurassic, especially from this time interval," Dean added.
This included comparison with other groups of reptiles (living and extinct), whose limb bones are different between males and females, something that had never before been applied to ichthyosaurs.
The finding was published in the Journal of Vertebrate Paleontology.