Billy the Kid is said to be pictured fourth from the left (above), and left in the cropped image (below)
The photo, bought at a junk shop in Fresno, California, in 2010, is a 4x5in tintype that shows Billy the Kid and fellow members of his gang The Regulators.
It was taken in the late summer of 1878, according to Kagin’s auction house, which has valued the photo and put it up for sale.
‘When we first saw the photograph, we were understandably sceptical – an original Billy the Kid photo is the Holy Grail of Western Americana,’ said Kagin’s senior numismatist, David McCarthy.
‘We had to be certain that we could answer and verify where, when, how and why this photograph was taken.
‘Simple resemblance is not enough in a case like this – a team of experts had to be assembled to address each and every detail in the photo to ensure that nothing was out of place.
‘After more than a year of methodical study – including my own inspection of the site – there is now overwhelming evidence of the image’s authenticity.’
Kagin’s president Donald Kagin added: ‘The historical importance of a photograph of Billy the Kid alongside known members of his gang and prominent Lincoln County citizens is incalculable – this is perhaps the single most compelling piece of Western Americana that we have ever seen.’
Kagin’s said the only other known photo of Billy the Kid is a portrait of the famous outlaw taken in 1880, which sold for $2.3m in 2010.