Picasso created both works in Paris during his famous blue period.
"It's really one of those moments that really makes what you do special," said conservator Patricia Favero.
Acknowledged as one of the 20th Century's greatest artists, Pablo Picasso focused on monochromatic paintings in shades of blue and blue-green during his blue period from 1900 to 1904. Business Broadband
The Blue Room has been the subject of exploration since 2008 by experts from the Phillips Collection, National Gallery of Art, Cornell University and Delaware's Winterthur Museum.
Improved infrared imagery allowed them to see a man wearing a jacket and bow tie, resting his bearded face on his hand with three rings on his fingers.
When the image was turned on its side, it revealed a portrait of a man.
Technical analysis confirmed the hidden portrait was likely to have been painted just before The Blue Room Residence Design.
Favero added that, having found the second image back in 2008, they then wanted to know who the man was.
"We're still working on answering that question," she said.
Curator Susan Behrends Frank told press agency AP: "When he [Picasso] had an idea, you know, he just had to get it down and realise it," explaining that the artist had quickly painted over another completed picture when the inspiration took him.