The ship, which could date back to as early as the 1830s, is incomplete, with only the keel, the lowermost portions of the stern and bow and a limited section of the bottom of the hull on the port side intact.
The vessel was found on a development site in Queens Wharf by construction workers.
A spokesman for ASI, an archaeological firm, says the schooner "seems to be a vestige of one of the earliest vessels found in Toronto" but added that "we're not confident it will be possible to preserve the remains."
This is the fourth time the remains of lake vessels have been found in similar archaeological projects. Other discoveries include an early 19th century vessel at the Rogers Centre, a Commodore Jarvis at the Air Canada Centre, and a late 19th century harbour scow at a condominium site on the former railway lands.