The creature was discovered by two nurses in the town of Kitchenuhmaykoosib in Ontario, Canada, while out on a walk with their dog.
When the dog began sniffing in the lake, the two women started investigating, before the dog pulled the dead animal out.
After taking some photographs of the odd animal, the nurses left it alone. When locals decided to go back and retrieve the body, it has disappeared.
The photographs have now been posted on a local website, with an explanation which reads: 'This creature was first discovered by Sam the Dog, a local dog.
'It was discovered first week of May in the creek section of town, hikers noticed Sam sniffing something in the water and they approached to see in what the Sam had detected and they noticed the creature in the water face down.
'The dog jumped in the lake and pulled the creature to the rocks and dragged it out for the hikers to see and these are the photos they took.
'The creature's tail is like a rat's tail and it is a foot long.'
There has been much speculation about what kind of species the animal is.
The body of the creature appears to look something like an otter, while its face - complete with long fang-like teeth, bears a striking resemblance to a boar-like animal.
Even the local police chief Donny Morris is baffled, saying: 'What it is, I don't know. I'm just as curious as everyone else.'
The pictures of the animal have caused mass speculation online, from bloggers who are all stumped as to what the creature could be.
One internet blogger wrote: 'That certainly is a face only a mother can love. It looks like some sort of otter, weasel-type thing.'
While another added: 'Some kind of mustelid - I thought otter first.
'Being in the water and bashed around has made the fur on the face and tail come off so clean like that.'
Many people have suggested the animal could be a new 'Montauk monster' - due to the similarities between these photographs and those of a different creature which washed up in Montauk, New York, in 2008.
The animal, which quickly earned the nickname the 'Montauk monster', thanks to the beach's location to a Long Island government animal testing facility, has never been officially identified - although the general consensus is that it was some kind of racoon.
However, other bloggers have speculated that the new creature discovered is a type of chupacabra, or 'goatsucker'.
The chupacabra is rumoured to inhabit parts of the U.S. , with many several hundred eyewitness accounts over the past few years.
But despite these sightings, the majority of biologists and wildlife experts believe the chupacabra is a contemporary legend.
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