The legend of Morag – a less well-known cousin of the Loch Ness monster – is detailed in a series of texts dating from 1902, compiled by Alexander Carmichael, a prolific gatherer of folklore.
The papers were discovered in 2011 and are being examined by the Carmichael Watson project at Edinburgh University.
Dr Donald Stewart, a senior researcher on the project, discovered the texts while leafing through a "mad mixture" of folklore collected by Mr Carmichael over 50 years.
He said: "We were so pleased when we found them. It was just totally unexpected."
The writings depict Morag in contradictory ways. On the one hand she is presented as a mermaid-like character with flowing hair, while another description paints her as a grim reaper whose sighting was viewed as a death omen.
Dr Stewart added: "I think the texts are pretty exciting. They give us a window back to how people saw this monster well over 100 years ago. They're the first reported sightings we have.
"It shows there were other monsters vying for popularity and Nessie happened to win out in the end. But there were a lot more of them out there."