Scottish Water was carrying out the works at Philiphaugh on the outskirts of Selkirk whilst laying new pipes between Howden and Yarrowford.
A Scottish Borders Council's archaeologist said:
"It is an exciting discovery. It is not every day that medieval villages are found - most of them are known, this one was completely unknown."
More top news
The driver of a Rangers supporters' bus which crashed on a roundabout killing a fan blamed the brakes when he was interviewed by police.
Sandy Murray, of Police Scotland, was was giving evidence at the trial of a bus driver who denies killing Ryan Baird by dangerous driving.
34-year-old Christopher Peck was involved in a head-on crash with a drunk driver. His funeral has taken place in his hometown, Workington.