The team uncovered a total of 28 rock art sites on the island of Kisar which measures just 81 square kilometres and lies north of Timor-Leste.
The paintings help tell the story of the region's history of trade and culture, researchers said.
"Archaeologically, no one has ever explored this small island before," said Sue O'Connor, from the Australian National University (ANU).
"These Indonesian islands were the heart of the spice trade going back for thousands of years. The paintings we found depict boats, dogs, horses and people often holding what look like shields," said O'Connor.
"The Kisar paintings include images which are remarkably similar to those in the east end of Timor-Leste," O'Connor said.
"A distinctive feature of the art in both islands is the exceptionally small size of the human and animal figures, most being less than 10 centimetres. Despite their size, however, they are remarkably dynamic," she said.
O'Connor said the relationship between the two islands likely extends back to the Neolithic period 3,500 years ago, which saw an influx of Austronesian settlers who introduced domestic animals, such as the dog, and perhaps cereal crops.
"These paintings perhaps herald the introduction of a new symbolic system established about two thousand years ago, following on the exchange of prestige goods and the beginning of hierarchical societies," O'Connor added.
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