The 8ft by 6ft thick canvas banner is surrounded on all four sides by a wide, billowing, dark blue silk border and was "discovered" in the run up to the church's 150th anniversary celebrations.
The front shows the flight of the Holy Family into Egypt to escape slaughter by Herod the Great, with the family being shown in the presence of an angel, and the caption reads "Help us".
On the reverse is a picture of the child Jesus and the words "SS Mary & Michael School, Garstang".
Church historian Dr Frank Carter said: "It is a magnificent specimen. I estimate it to have been made in the second half of the 19th century and would have been used during Whitsuntide Processions, when it would probably have been carried by two members of the Order of Catholic Brethren on long poles (which we still have), supported in leather holsters (which we still have) and stabilised by school children controlling ropes attached to the upper ends of these poles and to the banner."
The Order of Catholic Brethren were a group of parishioners who supported the parish in many ways.
Dr Carter said the society appeared to have become extinct somewhere around the beginning of the First World War.
"It may be that as young men they were required to serve their country or that their charitable roll was being to some extent assumed by the state.
"Equally one can appreciate that during the Great War, festivities such as Whit walks would probably seem inappropriate.
"Whatever the true reason, the Catholic gentlemen left the scene and with them seemed also to go the Whit walks as they had been."
He said the banner had been kept in the upper room of the church tower, rolled with protective cloth in its own long wooden box, and had possibly not been opened since 1914.
Dr Carter added: "The room has always been known as the 'banner room' but there never seemed to be reason enough to explore its main content.
"As the blower for the organ is housed in the room, fellow organist, Brian Dickinson, and myself felt it appropriate to unearth the banner and having done so were amazed to discover its wonderful state of preservation.
"It has required minimal repair to a suspensory band at one end and I am pleased to say that this was skilfully carried out on an ecumenical basis by one of our Anglican friends."
The banner is thought not to be strong enough to take the strain of being paraded outdoors again, and after the exhibition has been placed back on its roll and in its case.
l The recent exhibition at SS Mary and Michael to commemorate the church's 150th anniversay was a success attracting many visitors.