Also known as Bethlem and the New Churchyard, more than 20,000 Londoners are believed to have been buried there.
The ground was used by "a varied cross-section of society throughout the years since the burial ground was open," Nick Elsden, project manager from MOLA (Museum of London Archaeology) told CNN.
And they include those who could not afford a church burial or chose to perish there for religious or political reasons. The ground also contained the overflow of bodies when other cemeteries became full. Bedlam, now a synonym for chaos, took its name from the Hospital of St Mary of Bethlehem
in London which nursed the mentally ill.
Among the deceased are victims of the English Civil War, the Great Plague of 1665 and the Great Fire of London in the following year.
The site was found at an entrance of the city's new Liverpool Street Crossrail station -- part of a £14.8 billion ($22 billion) project that will expand London's railway network.
A team of 60 archaeologists will work six days a week on the project, expected to finish in September this year.
Elsden said the excavation reveals a great deal about how Londoners lived from the 16th to the 18th century. "A large sample of the population from that period will enable us to look at the lifestyle, looking at Roman London and what the Romans were doing in the suburb area, outside the city walls."
He said the skeletons will be cleaned and closely examined by experts who will assess their remains to determine their diseases, ages and sexes.
"Specialists will look at the DNA of the disease that killed the person rather than their own DNA," he added.
The findings are timely as well -- this year marks the 350th anniversary of the Great Plague in London. "1665 was the very last recorded episode of plague. There were 400 years of regular plague, and suddenly it stops," Jay Carver, Crossrail's lead archaeologist, said.
"And what we want to be able to find out, from sampling the graves of that date, is why that is. And what it is about the bacteria that causes bubonic plague that suddenly changed at that point."
Londoners also assisted in the research by helping to search parish records to identify people who were buried in Bedlam. "And that was a huge exercise which couldn't have possibly been done by our own team," Carver said.
The result is a database of more than 5,300 names and backgrounds
of those buried at Bedlam, including political activists John Lilburne and Robert Lockyer -- part of a movement known as the Levellers --as well as Ambrose Nicholas, the Lord Mayor of London in 1575.
A Roman road that runs underneath the site has already produced artefacts such as horseshoes and cremation urns.
Carver describes the Bedlam dig as a personal career highlight. "[It's a] great use of an engineering scheme, but at the same time addresses the historical importance of each these sites."