The ships clashed in the Battle of the Atlantic in 1942 and were lost for more than seven decades in an area known as the Graveyard of the Atlantic.
Researchers led by the National Oceanic and Atmospheric Administration's Office of National Marine Sanctuaries discovered the vessels about 48 kilometres from shore.
The discovery of the German U-boat 576 and the freighter Bluefields offers "a rare window into a historic military battle and the underwater battlefield landscape of WWII," NOAA said yesterday.
They battled on July 15, 1942 when a convoy of merchant ships being escorted from Norfolk, Virginia to Florida was attacked by the German submarine.
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"The U-576 sank the Nicaraguan-flagged freighter Bluefields and severely damaged two other ships," NOAA said.
"In response, US Navy Kingfisher aircraft, which provided the convoy's air cover, bombed U-576 while the merchant ship Unicoi attacked it with its deck gun."
Both ships were lost within minutes and sank to the seabed, but only one, the German boat, suffered casualties, 45 in all.
The wreck site is considered a war grave for the German crew and is protected under international law.
"They are under special protection and should, if possible, remain at their site and location to allow the dead to rest in peace."
The shipwreck was found in August by archaeologists aboard an NOAA research vessel.