They have discovered the remains of more than 64 ships buried in the thick clay and sand that covers the seabed - the greatest number of ancient ships to be found in one place - and more than 700 anchors. Gold coins and weights made from bronze and stone also hint at the trade conducted there.
Statues 5m tall have been brought to the surface, with hundreds of smaller statues of minor gods. Slabs of stone inscribed in the ancient Greek and Egyptian languages have also been raised.
And divers recently found dozens of small limestone sarcophagi, believed to have once contained mummified animals, put there to appease the gods.
Dr Damian Robinson, director of the Oxford Centre for Maritime Archaeology at the University of Oxford in England, who is part of the team working on the site, said the level of preservation was "amazing".
"We are getting a rich picture of things like the trade that was going on there and the nature of the maritime economy in the Egyptian late period," he said. "There were things coming in from Greece and the Phoenicians."
The researchers, working with German television documentary makers, have created a 3D reconstruction of the city. At its heart was a huge temple to Amun-Gereb, the supreme god of the Egyptians at the time.
From this stretched a vast network of canals and channels, which helped it become the most important port in the Mediterranean at the time.
Archaeologists from around the world gathered in Oxford to discuss the discoveries emerging from the treasures found in Heracleion, named for Hercules - or Heracles - whom legend claimed had been there. The city was mentioned by Homer and alluded to in other ancient texts.
Robinson said: "It was the major international trading port for Egypt at this time. It is where taxation was taken on import and export duties. All of this was run by the main temple."
Submerged under 45m of water in what is now the Bay of Aboukir, the city would have sat at the mouth of the River Nile in the 8th century BC, when it is thought to have been built.
Scientists still have no definite idea what caused it to slip into the water nearly 1000 years later, but it is thought that a gradual rise in sea level combined with a sudden collapse of the unstable sediment it was built on caused the area to drop by around 3.5m.
