In a statement released Wednesday, the authority said the ritual bath was found inside a building containing three halls dating back to the Second Temple period, not far from the Western Wall.
The edifice is built of delicately dressed ashlar stones and the architecture is similar to compounds King Herod built on the Temple Mount, and Hebron's Cave of Patriarchs, the authority said.
"It is interesting to see that in the middle of the first century they began making changes in this magnificent structure and a large ritual bath (mikveh) was installed inside its western hall where there were 11 steps descending to the immersion pool," Alexander Onn, director of the excavations, said.
"Immersing oneself in the mikveh and maintaining ritual purity were an inseparable part of the Jewish way of life in this period," he said.
The excavations were conducted together with the Western Wall Heritage Foundation. Rabbi Shmuel Rabinowitz, in charge of the Western Wall, said the cooperation between the authority and foundation ensures that no excavations approach the Temple Mount compound, a contact forbidden by Halachic law, the authority said.
The mikveh is a bath designed for ritual immersion in Judaism and is used by both men and women to achieve ritual purity.