Scientists found the fossilised remains of the animal’s skull, teeth, and humerus, or upper arm bone.
The lion – which was found in the remote north-western Queensland outback – has been extinct for at least 19 million years.
Researchers say it was part of the same family as kangaroos and koalas – the marsupial family.
But, unlike its modern day Aussie descendants it was a meat-eater, armed with a terrifying set of teeth.
Experts say they think the lion was about the size of a dog and weighed around 23 kilograms.
Named in honour of palaeoartist Peter Schouten, the lion was a predator that stalked Australia’s rainforests 18 to 26 million years ago.
Researchers say the lion is about a fifth of the weight of the largest and last surviving marsupial lion, Thylacoleo carnifex, that weighed around 130 kilograms and has been extinct for 30,000 years.
They said members of this family had “highly distinct” large, blade-like, flesh-cutting teeth that they used to tear up prey.
The latest discovery comes just a year after the remains of a kitten-sized lion were found in the same famous fossil site in Queensland.
Scientists named that miniature predator Microleo attenboroughi after legendary broadcaster Sir David Attenborough.
University of New South Wales scientists who made the discovery are very excited about their findings.
Lead author and palaeontologist, Dr Anna Gillespie, said the latest finding has raised new questions about the evolution of marsupial lions.
She said: “The identification of these new species have brought to light a level of marsupial lion diversity that was quite unexpected and suggest even deeper origins for the family.”