Te Arawa will bury bones found by a swimmer in Lake Tarawera the same day as a remembrance service for those who died in the Mt Tarawera eruption of 1886.
Tuhourangi kaumatua Anaru Rangiheuea said a woman swimming in the lake discovered the skeletal remains and a tiki near Otumutu Island at Tarawera.
The remains were taken by police and are being stored at Rotorua Hospital mortuary.
A woman had reported finding the bones and police divers recovered the remains and the tiki.
The remains will be interred at Te Kariri urupa on June 10, the anniversary of the eruption, and when a remembrance service will be held.
Mr Rangiheuea said he hoped the tiki which was found with the remains would not be interred with the bones but would be placed in a museum.
A decision about that had yet to be made, he said.
The discovery was not the first time bones had been recovered in the Rotorua area and there were several burial sites near Otumutu Island, Mr Rangiheuea said.
"It is quite sad and we expect this to happen from time to time because it was land that we once occupied."
Mr Rangiheuea said there was a problem with boats travelling too fast and this caused erosion around the burial sites. He said Otumutu Island used to be a lot bigger.
Rotorua District Council kaupapa Maori director Mauriora Kingi, who is a Tuhourangi descendant, said it was fitting for the bones to be buried on the anniversary of the Tarawera eruption.
On June 10 almost two years ago human remains accidentally dug up at Lake Tarawera were laid to rest at Te Kariri urupa.