A team of divers from the west-coast town of Rauma announced on Thursday that they had found the ship in the Gulf of Bothnia, north of the Åland Islands and west of Rauma. The group, Raumanmeren Hylky-Team, have not revealed a more exact location.
The hulk lies at a depth of around 80 metres.
The 220-tonne Swedish steamship Kyros was carrying hundreds of bottles of cognac and liqueurs when it was torpedoed by a German u-boat on May 19, 1917 -- apparently one of nine Swedish vessels sunk that same day.
According to some reports, it was carrying a mixed cargo including steel products and as many as 1,000 bottles of cognac and 300 bottles of liqueur.
Diving teams have been searching for the elusive vessel for years. In the late 1990s, a Swedish group of treasure-hunters believed they had found it, but the object turned out to be a rock outcropping.
The divers say the vessel has remained quite intact. They will decide whether to try to raise the contents after closer examination.
"It's extremely difficult to operate down there," diver Pasi Rytkönen told YLE. "The ship is intact, although it has begun to slowly fall apart and there's lots of sediment. You can't just go down there and just bring up whatever."
Rytkönen's team plans to continue diving with a larger robot, but what will happen after that remains murky. No owner of the ship or its cargo has been identified. According to Rytkönen, the situation is therefore clear: "Finders, keepers!"
In 2010, Finnish divers made worldwide headlines when they raised a valuable cargo of antique champagne bottles from a shipwreck near Åland.