Kate Kelly was a member of the five-person gang led by her brother, which was involved in a string of robberies in eastern Australia in the 19th century. Ned Kelly was finally captured and hanged in Melbourne in 1880 at age 25.
The revolver with the initials "K.K." was found in the former home of the Kelly family just a few years ago.
The Australian Broadcasting Corp. reported the gun is up for sale at a Melbourne auction house next week. Auction director Paul Sumner said the revolver was a "rare and exciting find."
"In America, it would be equivalent to finding Jesse James' gun," he said.