The painting was first owned by Marie Marguerite Soulie, who was married to the English novelist and playwright Arnold Bennett from 1917-1921. Its whereabouts have been unknown to scholars until now.
The painting, Royan Harbour, will go on sale at Bonhams Scottish Art Sale in Edinburgh in October and is estimated at £70,000-100,000.
Bonhams head of Scottish art in Edinburgh, Chris Brickley said: “The paintings Peploe produced in the French coastal resort of Royan in 1910 comprised his most original work to date.
"Absorbing the work of Les Fauves at first hand in Paris, and inspired by his dialogue with JD Fergusson, this newly discovered work showcases the hallmarks of the series – pure colour, spontaneous handling and the visual tension between form and space.”
Peploe, who was born in 1871 and lived to 1937, was a Scottish Post-Impressionist painter, noted for his still life works.
The sale also features a major portrait by Peploe’s fellow Colourist, Francis Cadell. The painting, Miss Don Wauchope in the George Street Studio, is estimated to sell for between £200,000-300,000. The sitter was a friend of the artist and appears in many of Cadell’s most celebrated works.
Mr Brickley said: “Intimate in atmosphere and fluid of technique, the Wauchope pictures such as Miss Don Wauchope in the George Street Studio transcend the norms of conventional portrait-painting and become abstract studies of the elegant high society world of early 20th century Edinburgh in which both artist and model mixed.”
Other works in the sale include: Private Dancer by Jack Vettriano, Mull from Iona by Francis Cadell and a selection of works by Wilhelmina Barns-Graham including Black, White and Yellow.
Sannox Bay, Isle of Arran by John Maclauchlan Milne will also be on sale.