The seven pieces are thought to come from the Old French sequence of texts known as the Vulgate Cycle or Lancelot-Grail Cycle, dating back to the 13th century.
They were found hidden in a series of 16th century books deep in the archive of Bristol Central Library and are now being analysed by academics from Bristol and Durhamuniversities.
Parts of the Vulgate Cycle were probably used by Sir Thomas Malory as a source for his Le Morte D'Arthur, which is itself the main source text for many modern retellings of the Arthurian legend in English.
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The handwritten parchment fragments were discovered by Michael Richardson, from the University of Bristol's special collections library, bound inside a four-volume edition of the works of the French scholar and reformer Jean Gerson.
He recognised several familiar Arthurian names and contacted Dr Leah Tether, president of the British branch of the International Arthurian Society, to see if the finds were in any way significant.
She put a team of experts together to discover more about the fragments' journey to Bristol, including when and where they were made and how they came to be bound in the Gerson volumes.
Dr Tether, from the University of Bristol, said: "These fragments of the Story Of Merlin are a wonderfully exciting find, which may have implications for the study not just of this text but also of other related and later texts that have shaped our modern understanding of the Arthurian legend.
"Time and research will reveal what further secrets about the legends of Arthur, Merlin and the Holy Grail these fragments might hold.
"The South West and Wales are, of course, closely bound up with the many locations made famous by the Arthurian legend, so it is all the more special to find an early fragment of the legend - one pre-dating any version written in English - here in Bristol."
The books in which the fragments were found were all printed in Strasbourg between 1494 and 1502.
At some point, these books made their way to England and the style of the binding suggests they may have been first bound here in the early 16th century.
Dr Tether added: "We believe that the process of lifting the pastedowns led to one leaf becoming irreparably damaged, and so it was simply disposed of.
"The other leaves do in fact have significant damage from the same process, so whilst this is conjecture, it seems plausible.
"Because of the damage to the fragments, it will take time to decipher their contents properly, perhaps even requiring the use of infra-red technology.
"We are all very excited to discover more about the fragments and what new information they might hold."