The discovery was announced by Sea War Museum Jutland in a press statement on Thursday.
The ship was one of the most highly-sought wreckages in the region, with both Danish and international divers having searched carefully for it over a period spanning decades.
Its location was found to be at a depth of 177 metres and a significant distance further east than had previously been thought.
Sea War Museum Jutland director Gert Norman Andersen expressed his delight at the long-awaited discovery.
“For us, this is one of the better-known shipwrecks and there has been a lot of mystery about it. So it’s great news that we can now say where it is,” he said.
Andersen added that, now the ship had been located, it would be possible to ascertain its cargo. Historians have speculated as to whether it was transporting large canons or explosives.
M/S Pionier was en route from Frederikshavn to Frederiksstad in Norway in September 1940 with 823 people on board when it suffered a huge explosion north of Skagen and rapidly sank, costing 333 lives.
British information stated that the ship was sunk by a torpedo from the HMS Sturgeon, but the government of Nazi Germany rejected this, claiming that the ship was sunk by a mine or due to sabotage.
“Our scans of the wreckage substantiate the British reports. All signs suggest that the middle of the ship was torn apart by a torpedo,” Andersen said.