The knee-deep channels, dating back 2,800 years, are located outside Jerusalem's walled Old City.
"We looked at the installation and realised that we had stumbled on something unique," said archaeologist Yiftah Shalev in a joint statement, dubbing the discovery a "mystery".
The channels may have been used to prepare a commodity "connected to the economy of the temple or palace", said archaeologist Yuval Gadot in the statement.
"The production of linen, for example, requires soaking the flax for a long time to soften it.
The find, part of Israel's City of David National Park, will go on public display next week, the statement said.
Persons:
Yiftah Shalev, Yuval Gadot, Gadot, Dan Williams, Sharon Singleton
Organizations:
Israel Antiquities Authority, Tel Aviv University, David, Thomson
Locations:
Israel, Jerusalem, JERUSALEM, Old City, Israel's City