The discovery was made during the renovation of pipelines and paving around the Franziskanerplatz, according to news agency ATS.
Historians know that the Heiliggeist-Spital (Holy Spirit Hospital) was located in that area from the 13th century until it was demolished in 1656. At one time, the hospital had a church, but that was also torn down in 1788 after falling into disrepair.
During the excavation archaeologists uncovered not only the remains of the church but also evidence of an older church on the same site, believed to have been built in 1345.
Plaster fragments showed that the choir was decorated with colourful frescos, project manager Fabian Küng told ATS.
Archaeologists also unearthed human bones from the garden of a former Franciscan monastery next to the church. The garden was used as a cemetery from 1600 to 1798 due to overcrowding in the city's main cemeteries, said ATS.
The Old Town of Lucerne is thought to have been occupied for at least 800 years. Though it has no official founding date, historians regard 1178 as the year the city was born.
Many of its most beautiful buildings were constructed in the Middle Ages, with the chapel bridge – Lucerne's symbol – built around 1300.