The children were students at the Kamloops Indian Residential School in British Columbia that closed in 1978.
The discovery was announced on Thursday by the chief of the Tk'emlups te Secwepemc First Nation.
Prime Minister Justin Trudeau said it was a "painful reminder" of a "shameful chapter of our country's history".
The First Nation is working with museum specialists and the coroner's office to establish the causes and timings of the deaths, which are not currently known.
Rosanne Casimir, the chief of the community in British Columbia's city of Kamloops, said the preliminary finding represented an unthinkable loss that was never documented by the school's administrators.
Canada's residential schools were compulsory boarding schools run by the government and religious authorities during the 19th and 20th Centuries with the aim of forcibly assimilating indigenous youth.
Kamloops Indian Residential School was the largest in the residential system. Opened under Roman Catholic administration in 1890, the school had as many as 500 students when enrolment peaked in the 1950s.
The central government took over administration of the school in 1969, operating it as a residence for local students until 1978, when it was closed.
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