The 90 million-year-old animal from northern Patagonia measured about 7.6m long and would have weighed about a tonne - about the same as a polar bear.
Details of the work by an international team appear in the journal Plos One.
Like Tyrannosaurus rex, the new Gualicho shinyae is a theropod, one of the two-legged, bird-like dinosaurs - but it`s on a different branch of the family tree.
"Gualicho is kind of a mosaic dinosaur, it has features that you normally see in different kinds of theropods," said co-author Peter Makovicky, from The Field Museum in Chicago, US.
Bad luck
The position of Gualicho on the theropod tree suggests it evolved its small forelimbs independently from other carnivorous dinosaurs which shared the trait - rather than it arising from a common ancestor.
"It`s really unusual—it`s different from the other carnivorous dinosaurs found in the same rock formation, and it doesn`t fit neatly into any category," said Dr Makovicky.
Despite its relatively large size, the dinosaur`s forelimbs were the size of a human child`s, and like T. rex, it had just two digits (thumb and forefinger).
The dinosaur was uncovered towards the end of the expedition in northern Patagonia.
The dig was beset with bad luck, including a car crash in which a truck carrying the team rolled over (but in which no one was badly hurt).
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