A Dunedin City Council spokesperson said the sinkhole, which had formed in Manor Pl near the intersection with Princes St, was identified on Friday morning and may have been associated with a leaking water pipe further uphill.
The pipe had since been repaired and the sinkhole would be filled and sealed over in the next two days, they said.
At road level, the hole measured about 1.5m across.
However, the cavity underneath the road was much larger, and appeared to be up to 1.5m deep and 3m wide in some places.
"Contractors excavated material up to 5m deep by 4m wide to ensure all loose material was removed.
"One lane of the road is closed in the area around the sinkhole, but there are no other issues on site.
"We expect the lane to reopen once the repairs are complete."
— APL