The team of Australian and Vietnamese archaeologists discovered the man-made toilet about 30km south of Ho Chi Minh City.
Known as 'Rach Nui', it's an ancient man-made mound, about five metres tall, surrounded by small tidal streams and mangrove swamps.
One of the team's archaeologists, Dr Marc Oxenham from Australian National University, told Radio Australia that human and dog waste had been perfectly preserved in the Rach Nui, giving archaeologists valuable insights into the diet of the people.
"There's broken animal bone trapped inside them, there's fish bone, there's vegetable matter that's preserved," Dr Oxenham said.
Dr Oxenham says the team believe the latrine to be about 3500 years old.
They have also found evidence of ancient buildings in the area.
"We've got preserved structures or foundational structures of buildings that would've been manufactured 3500 to 4000 years ago as well," Dr Oxenham said.
"We've never found anything like that before."
Other treasures uncovered by the team during the seven-week dig included ceramic and bone artefacts and small chisels made from turtle shells.
"There's an enormous amount of work for us to do over the coming months to try and understand exactly what these people were doing and how they were living."