Dubbed the "Radcliffe wave" in honour of the Radcliffe Institute for Advanced Study, the discovery transforms a 150-year-old vision of nearby stellar nurseries as an expanding ring into one featuring an undulating, star-forming filament that reaches trillions of miles above and below the galactic disk.
The team analysed data from the European Space Agency's Gaia spacecraft, launched in 2013.
It combined the super-accurate data from Gaia with other measurements to construct a detailed, 3D map of interstellar matter in the Milky Way, and noticed an unexpected pattern in the spiral arm closest to the Earth.
They discovered a long, thin structure, about 9,000 light years long and 400 light years wide, with a wave-like shape, cresting 500 light years above and below the mid-plane of our Galaxy's disk.
"No astronomer expected that we live next to a giant, wave-like collection of gas - or that it forms the Local Arm of the Milky Way," said Alyssa Goodman from Harvard University.
"The Wave's very existence is forcing us to rethink our understanding of the Milky Way's 3D structure," said Goodman, also co-director of the Science Programme at the Radcliffe Institute of Advanced Study, in a paper published in Nature.
The new, 3D map shows our galactic neighbourhood in a new light, giving researchers a revised view of the Milky Way and opening the door to other major discoveries.
Before Gaia, there were no significant datasets expansive enough to reveal the galaxy's structure on large scales.
Since its launch in 2013, the space observatory has enabled measurements of the distances to one billion stars in the Milky Way galaxy.
( With inputs from IANS )