Archaeologists made the discovery at Tresness in Sanday while on a walk in poor weather on Monday.
The remains of 14 houses and stone tools, including knives, have been described as "one of the biggest complexes of Bronze Age settlement in the Scottish isles".
The finds on the beach could be more than 4,000 years old.
Archaeologists believe the houses were buried by sand dunes in the second millennium BC - but have recently been exposed by the actions of weather and the sea.
Prof Jane Downes and Christopher Gee, of the University of the Highlands and Islands, Prof Colin Richards, of the University of Manchester and Dr Vicki Cummings, of University of Central Lancashire, made the discovery.
They were on a sea shore walk to visit a known archaeological site when they spotted the remains of the houses and stone tools.
Prof Downes, who specialises in the Bronze Age, said: "This must be one of the biggest complexes of Bronze Age settlement in the Scottish isles, rivalling the spreads of hut circles in other parts of mainland Scotland."
The scale of the Sanday has been described as "unparalleled in Orkney". The islands are well-known for the Skara Brae Neolithic settlement.
Cath Parker, leader of the Sanday Archaeology Group, said: "This is incredibly exciting.
"The archaeological landscape concealed beneath Sanday's  shifting sands never ceases to amaze us.
"I'm sure the local community will relish the opportunity to be involved with any work which stems from this thrilling discovery."
Important Bronze Age discoveries have been made in recent years in other parts of Scotland.
Skeletal remains found at Drumnadrochit on the shores of Loch Ness were identified in February as dating back to the Early Bronze Age.
A wrist guard, for use with a bow and arrow, and shards of pottery were among remains found in a burial cist that was uncovered during work to build a new health centre.
Evidence of Bronze and Iron Age settlements were found at the site of the new Inverness Campus. The remains of timber-built roundhouses and crop marks were recorded at East Beechwood.

McDonald, 25, was on the transfer list at Sixfields and has agreed a two-year contract with the Sky Blues.
He is Coventry's third signing following relegation from League One, after striker Marc McNulty and midfielder Michael Doyle.
"He is a quick, strong and aggressive centre-half, who can also read the game well," boss Mark Robins said.
Liverpool-born McDonald started his career at Manchester City's academy before joining the youth set-up at Stoke City.
He later went on to Oldham, Colwyn Bay, Nantwich, Hereford United and AFC Telford United, joining Northampton in 2015 and making 37 appearances for the Cobblers.
Find all the latest football transfers on our dedicated page.

The publication by German theologian Martin Luther, called On the Freedom of a Christian, dates back to 1520.
This was a year before he was excommunicated by the Pope for criticising the Catholic Church.
It includes around 50 notes written in red by Luther himself, indicating changes he wanted for a second edition.
The American who made the discovery, James Hirsten, said it gave an important insight into Luther's thinking at the time.
The annotated edition was found in The Humanist Library in Selestat, in the north-east of France.
Martin Luther launched the Reformation in Germany five centuries ago in response to what he said were excesses and abuses within the Church.
But his works, which also included Christian Liberty, To the Christian Nobility and On the Babylonian Captivity of the Church, turned him against many of the major teachings of the Catholic Church.
After his excommunication by Pope  Leo X in January 1521, Luther was declared an outlaw and a heretic by the Roman emperor at that time, Charles V.
He later went on to publish a complete translation of the bible into German, which contributed to the spread and development of the German language.
Shifting sands have revealed a significant complex of Bronze Age buildings in Orkney.
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Coventry City have signed centre-back Rod McDonald from Northampton for an undisclosed fee.
[NEXT_CONCEPT]
A first edition of one of the most important works of the man who inspired the Protestant Reformation has been discovered in a library in France.