Hungry Hobos, was made in 1928 but has been missing since before World War II.
The black-and-white cartoon features Oswald the Lucky Rabbit and was drawn shortly before the character was abandoned and turned into Mickey Mouse that same year.
Incredibly, the five-minute silent cartoon has turned up in a vault at the Huntley Film Archives in Herefordshire, where it has sat for decades.
Amanda Huntley, who runs the company, said a colleague stumbled upon it on a shelf and out of curiosity searched its name on Google and discovered it was a “lost” classic.
Amanda Huntley said: “There are a lot of lost films out there. This was made in 1928 and has been in our collection for decades.
“We specialize in social history films and not animation. But my colleague took the film from the shelf and Googled it – I don’t really know why.
“We quickly realized it was one of the great lost films. We posted the news on specialist web forums and everybody was very excited.”
Oswald’s facial features and behaviour are clearly those of Mickey Mouse – the legendary character that has endured ever since.
The whereabouts of the film has for decades baffled animation experts, who believed it would never be seen again.
It is now expected to fetch at least £25,000 ($39,000) when it goes under the hammer at Bonhams’ Entertainment Memorabilia auction in Los Angeles next month.
Hungry Hobos was released for general screening on May 14, 1928, just one day before Mickey Mouse’s feature debut, Plane Crazy, had its first preview screening.
The film marked a significant turning point for Walt Disney as it was the last time he had to work alongside another studio.
Amanda Huntley said: “It is significant because it is Disney but also because the character was the prototype of Mickey Mouse.
“Disney developed many characters and they changed over time and Oswald has the characteristics of Mickey Mouse – he looks similar even though he’s a rabbit.
“Disney made a series with this character and then turned him into a mouse.
“Mickey Mouse has lasted over 80 years and many generations have grown up to love him.
“How we ended up with the film I don’t know. It was probably collected by my father who started the company and it has been sitting on our shelves for decades.
“We have decided to sell it because it is not really what we specialize in and we can use the money to preserve other films we have.”
Stephanie Connell, from Bonhams, said: “Hungry Hobos is an incredible find, a lost masterpiece and a cartoon with a unique and vital place in animation history.”
Hungry Hobos comprises of a 16mm double perforated celluloid acetate positive print.
The film is being auctioned on December 14.
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