Yelizaveta Valdimirovna, 17, was born from a years-long affair between the strongman president and Svetlana Krivonogikh, an investigative news site says.
Sources told Proekt that married Putin and Svetlana began their affair while she was a cleaner and he was the married head of the FSB in the late 90s.
The pair are said to have split up shortly after Yelizaveta was born in 2003.
She has no father listed on her birth certificate and now bears a "striking resemblance" to the 68-year-old, who has two other daughters with his ex-wife Lyudmila Shkrebneva.
Putin declined to comment and Kremlin spokesman Dmitry Peskov denied all knowledge of Svetlana or her daughter.
But information gathered by Proekt suggests Svetlana was born in St Petersburg in 1975, growing up in a modest apartment amid neighbours with links to organised crime.
During the late 90s she worked as a cleaning lady at store close to her family home while studying at the University of Economics and Finance in the Department of International Economic Relations.
In 2000 she received her diploma, and soon after moved out of the apartment and into her new residence on the Kamenny Islands with her mother.
Apartments on the island are not for general sale and are occupied solely by those close to Putin, the site reports.
Around the same time she is thought to have come into ownership of valuable stock options, with no benefactor listed on public records.
However, one of her biggest stock holdings is in Bank Rossiya, which has ties to Putin and many of his cronies.
Three years later, Svetlana gave birth to daughter Yelizaveta whose middle name - typically derived from the father's name in Russia - is Vladimirovna, the site reports.
Two sources close to Svetlana said Putin was her mystery benefactor, and that their relationship began some time in the Nineties and ended in the early 2000s.
It is not clear exactly when or how the pair met, or why they eventually split up.
Some time before 2010 the two are thought to have severed ties completely, the sources said.
However, Svetlana still enjoys her house in St Petersburg along with other properties in Sochi and Moscow, worth an estimated total of $11million.
She is also thought to own a majority stake in the Igora Ski Resort, 70 miles north of St Petersburg, which is a favourite haunt of Putin's, and another majority stake in the Leningrad Center performance venue.