Peering through the Herschel Space Observatory, a team led by the European Space Agency detected water plumes spewing from two regions on Ceres.
The observations, published in Thursday's issue of Nature, come as NASA's Dawn spacecraft is set to arrive at the Texas-sized dwarf planet next year.
It's long been suspected that Ceres is water-rich, but previous detections have been inconclusive. This is the first definitive evidence of water on Ceres and confirms that it has an icy surface, said lead author Michael Kuppers of the European Space Agency.
"It makes Ceres a more exciting target" for exploration, he said.
The latest finding puts Ceres in a special class of solar system objects with active plumes of water, a key ingredient for life. The company includes Jupiter's moon Europa - where an underground ocean is believed to exist - and the Saturn moon Enceladus, where jets have been seen venting from the surface.
The source of the water plumes is still unclear. Scientists think there may be a layer of ice just below the surface that gets heated by the sun or the plumes could be spewed by ice volcanoes.
Dawn won't be in the best position to witness any water activity since it'll arrive at a time when Ceres is far from the sun. But the spacecraft carries instruments that can detect water and it will map the dwarf planet in detail, said Dawn deputy project scientist Carol Raymond, who had no role in the telescope discovery.
Launched in 2007 and powered by ion propulsion, Dawn is the first spacecraft to orbit two space rocks.
Ceres is different from Dawn's first target, Vesta, the second largest object in the asteroid belt between Mars and Jupiter. The zone is littered with rocks left over from the formation of the solar system 4.6 billion years ago, allowing scientists to study how Earth and the other planets evolved.
Unlike Ceres, Vesta is dry and rugged. Its scars reveal it got whacked twice by smaller asteroids. Some of the debris was cast into space and rained on Earth as meteorites.