The well-preserved fossil has a nearly complete cranium and mandible and a partial skeleton.
The otter, named Siamogale melilutra, weighed about 50 kilograms, around the same as a wolf, and measured up to two meters in length -- almost double the size of a modern otter.
Computed tomography restoration of the skull revealed a combination of otter-like and badger-like skull and tooth characteristics, according to Xiaoming Wang, head of vertebrate paleontology at the Natural History Museum of Los Angeles County, adding that the species belonged to an extinct group of otters in East Asia.
Otters are semi-aquatic predators. Modern otters have worldwide distribution, but their fossil record is poor.
The new species discovered in Yunnan and that previously found in Shanxi Province outlined the migration paths of otters moving from Southeast Asia to south China and then north China and can help scientists better understand the evolution of the animals.
The fossils were unearthed in a coal pit by a team of archaeologists in Yunnan in 2010. The discoveries were published in the latest issue of the Journal of Systematic Paleontology by scientists from China, the United States and France.