Australian palaeontologist Jeffrey Stilwell, of Melbourne's Monash University, found a 2km-long deposit of bones, teeth and claws and has already uncovered more dinosaur fossils in the Chathams than have been unearthed in New Zealand over the past 25 years.
One of the few previous finds of a land dinosaur was a single bone - also from a theropod - found by New Zealand amateur palaeontologist Joan Wiffen, of Havelock North.
Until her first find of a fossil bone at the Mangahouanga Stream site in Hawkes Bay, it was widely thought that New Zealand probably had not had dinosaurs.
At least three kinds of carnivorous dinosaur, three kinds of herbivorous dinosaur, one kind of flying reptile and marine reptiles such as mosasaurs and elasmosaurs have been found at the Chathams site.
Theropods were two-legged and big-brained, about 4m long and weighed up to four tonnes.
Dr Stilwell said his early discoveries on the Chathams - finger, spinal and foot bones, and a single claw - provided further evidence that land-dwelling dinosaurs lived in New Zealand and possibly other isolated islands in the southwest Pacific.
The research was recently published in the journal Palaeogeography, Palaeoclimatology, Palaeoecology.
"There's no other bone deposit like this known, at least in the Southern Hemisphere," Dr Stilwell said in a report on the website of Australia's Channel 9.
"It's really a unique type of sediment deposit in that the bone-rich horizons extend for at least 2km of wave-cut platform and cliff exposures."
He found it by accident while visiting the Chathams in 2003. "Prior to our discoveries, only a few isolated examples of dinosaur fossils had been found in the northern part of New Zealand," he said.
While some dinosaur remains had been found along the Antarctic peninsula and in South America, this was the first such discovery outside the New Zealand mainland in the southwest Pacific, he said.
Most previous dinosaur fossils found on the mainland have been of marine reptiles, because during the main periods in which dinosaurs lived, New Zealand spent a lot of time under the sea.
Fossils found on the mainland have included rikisaurus and plesiosaurs, which both lived in the sea.
Ichthyosaurus, a marine reptile, has been found in the Mt Potts region of the South Island West Coast, and at Mt Harper, Canterbury, a nothosaur, a primitive amphibious sea lizard was found.
In Hawkes Bay, Mrs Wiffen and her helpers collected enough bones to identify a new species of mosasaur.
With a grant from the National Geographic Society, Dr Stilwell and associates returned to the Chatham Islands, already well-known as the world's best source of fossilised shark's teeth, to continue their research, and a further trip last month yielded a "huge collection" of new fossils, which were still being analysed.
"The story's going to get better," he said.
Fossils are not classed as artefacts under the Antiquities Act, and finders can legally claim ownership of them, according to Porirua historian Rhys Richards.
Mr Richards had a fossil whale bone confiscated from his luggage in 1999 by the Chatham Islands airport manager.
He said he was told it would be offensive to local iwi for such a taonga to be removed from the Chathams.