The inscription, which was found by visitors at the ancient major fortified city of Lachish, appears on a potsherd and reads "Year 24 of Darius," in the Aramaic language.
It is the first discovery of an inscription bearing Darius the Great's name in ancient Israel, the IAA noted on Wednesday.
The inscription may have been an administrative note, written by a storeroom official, similar to a receipt for goods or for their dispatching, providing evidence for the Persian royal administration at Lachish in the Achaemenid period, it added.
During his long reign, between 522 and 486 BC, the Persian Achaemenid Empire expanded, reaching its greatest extent under his son Ahasuerus, Xinhua news agency reported.
The pottery shard was found in the area of a Persian elaborate administrative structure, where taxes for the Persian king's treasuries were collected and dispatched.
According to the IAA, the building covered a large area and comprised halls and courtyards with a majestic columned portico entrance in Persian style.