An Aboriginal painting worth up to $150,000 which was presumed missing after many years of extensive searches, has been discovered right under the government's nose.

Travelling Dreaming by Mick Namarari Tjapaltjarri was lent to the Northern Territory chief minister's office sometime after 1978, then disappeared in 1981.

The 44-year-old painting, often referred to as a Papunya board, is valued between $100,000 and $150,000 and is part of a collection of boards credited with bringing Aboriginal art to the rest of the world in the 1970s.

During a meeting about three weeks ago, Angela Hill, head of arts in the NT, spotted the artwork hanging in the office of NT Tourism chief executive Alistair Shields, who had found it stashed away in an old store room.

"The office needed a little bit of life and colour, however I had no idea that I was hanging a prized piece of Northern Territory art," he said.

"I was shocked to learn it was a one-of-a-kind Mick Namarari Tjapaltjarri painting that had been missing for 35 years, last seen in the chief minister's office in the '80s."

Luke Scholes, curator of an upcoming Papunya art exhibition, said the way the painting went missing was reflective of the Northern Territory at the time.

Alistair Shields in his office with Mick Namarari Tjapaltjarri's painting Travelling Dreaming. ( ABC News: Dijana Damjanovic )

"There was no requirement to have loan documentation, the city was still in the depths of rebuilding after Cyclone Tracy, you have to show empathy to that time and what people were going through," he said.

"I was devastated to learn that it was missing, Namarari was one of the most innovative and successful artist of that generation, but the fact that it turned up is evidence that no-one snatched it."

Travelling Dreaming will require some significant conservation work to restore it to its original condition; it has some water damage which is thought to date back to Cyclone Tracy.

A team of curators, along with Mick Namarari Tjapaltjarri's widow Elizabeth, is working to prepare the painting for display in an exhibition alongside 130 of the 226 boards created in the remote settlement of Papunya, which is heralded as the birthplace of contemporary Aboriginal art.

Mick Namarari Tjapaltjarri was one of the founding artists at Papunya and his work inspired many other Aboriginal artists and styles.

Today, Papunya Tula, or dot painting, is the flagship of Australia's multi-million-dollar Aboriginal art industry.