Her sinking with the loss of nearly 1,200 lives caused such outrage that it propelled the U.S. into the First World War.
But now divers have revealed a dark secret about the cargo carried by the Lusitania on its final journey in May 1915.
Munitions they found in the hold suggest that the Germans had been right all along in claiming the ship was carrying war materials and was a legitimate military target.
The Cunard vessel, steaming from New York to Liverpool, was sunk eight miles off the Irish coast by a U-boat. Maintaining that the Lusitania was solely a passenger vessel, the British quickly accused the 'Pirate Hun' of slaughtering civilians.
The disaster was used to whip up anti-German rage, especially in the U.S., where 128 of the 1,198 victims came from. A hundred of the dead were children, many of them under two.
Robert Lansing, the U.S. secretary of state, later wrote that the sinking gave him the 'conviction we would ultimately become the ally of Britain'.
Americans were even told, falsely, that German children were given a day off school to celebrate the sinking of the Lusitania.
The disaster inspired a multitude of recruitment posters demanding vengeance for the victims.
The diving team estimates that around four million rounds of U.S.-manufactured Remington .303 bullets lie in the Lusitania's hold at a depth of 300ft.
The Germans had insisted the Lusitania - the fastest liner in the North Atlantic - was being used as a weapons ship to break the blockade Berlin had been trying to impose around Britain since the outbreak of warfare in August 1914.
Winston Churchill, who was first Lord of the Admiralty and has long been suspected of knowing more about the circumstances of the attack than he let on in public, wrote in a confidential letter shortly before the sinking that some German submarine attacks were to be welcomed……