Schoolgirl Victoria Nelson, seen here with her grandmother, is the grand-niece of the Purple Rain singer.
She is the granddaughter and last surviving blood relative of Prince's half-brother Duane Joseph Nelson, who died in 2011 - meaning she has a right to stake a claim.
Duane was employed as the star's head of security at Paisley Park before the pair fell out before his death.
Prince had eight siblings: Duane Nelson and Lorna Nelson, both deceased, and Tyka Nelson, John Nelson, Omar Baker, Alfred Jackson, Sharon Nelson and Norrine Nelson. Lorna Nelson has no known survivors.
Victoria is entitled by law to at least a one-seventh share of Prince's estate - currently estimated at $300 million - on a par with the singer's six surviving siblings.
That means the teen, believed to be aged 13 or 14, stands to pocket a staggering $42.8million.
Investigators at Heir Hunters International - a company which specializes in genealogical research and finding heirs across the globe - found Victoria while researching the genealogy of Prince's family.
Daily Mail Online reached out to Victoria's grandmother Elberta Butler, the widow of Duane Nelson Sr, and broke the news to the family.
Shocked, Mrs Butler, 59, said: 'I'm very surprised about all of this, everything, it's going to take us a few days to digest it.'
When told her granddaughter stands to inherit $42 million, Mrs Butler, who has remarried since her husband's death, said: 'Oh yeah, I understand that.
'I'm her grandmother, Victoria is my son's only child and my son has passed.
'She's not over 18, she's a minor. I need to think about this.'
Significantly, Victoria, who lives in Minnesota, was not named in legal documents filed by Prince's sister Tyka Nelson on Tuesday in a Minneapolis court.
Nelson filed the paperwork at Carver County District Court saying the star has no will.
'I do not know of the existence of a will and have no reason to believe that the decedent executed testamentary documents in any form,' Nelson said in the paperwork.
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