The weapon used to murder Lyra McKee was stolen to order for dissident republicans during a gun shop raid in Co Fermanagh.
The robbery netted the gang five of the distinctive Hammerli .22 target pistols, one of which ended up in the hands of the New IRA in Derry and was used to kill the journalist during a riot last year.
Police acting on intelligence recovered the gun hidden alongside a bomb in the Ballymagroarty area of the city last weekend.
Security sources have linked it directly to a 2008 hold-up in the village of Garrison by three masked men armed with a shotgun.
Other firearms taken included a Glock 9mm pistol, a Sig Sauer 9mm, a Walther. 22 handgun and a quantity of ammunition.
The Hammerli used to kill Lyra is believed to have been used in shootings by at least one other dissident group before being handed over to the New IRA.
Desperate for weaponry, the terror gang is also known to have paid burglars to break into houses where guns are legally kept.
A 2017 raid on a property in the village of Manorcunningham near the Derry/Donegal border which netted two firearms was also the work of the New IRA.
So too were a spate of gun thefts across the north-west in 2014 that resulted in the PSNI making an appeal to owners to ensure weapons were stored safely.
Another source of weaponry for the New IRA is a criminal gang in Belfast with which it exchanged grenades stolen from an Irish army barracks in Donegal for a .38 revolver, Browning 9mm and Uzi sub-machine gun.
The grenades ended up in the hands of dissident gang ONH (Oglaigh na hEireann), which used them in several attacks on police in the greater Belfast area.
Police launched a detailed examination of the area where the gun used to murder Lyra was found after the arrests of several dissident republicans.
These included Barry Millar (35), who has a conviction for taking part in an illegal parade in support of the New IRA, and Jude McCrory, the chairman of the Derry branch of Saoradh, which is the republican gang's political wing.
A search warrant for the 23-year-old's home said "there are reasonable grounds to believe that certain items" were hidden on the premises. According to legal papers, this included "items or documents pertaining to a proscribed organisation, mobile phones, media storage device and computers".
McCrory was freed without charge after questioning, later taking to social media to criticise his detention and claiming that the only items taken by police were a birthday card, book and an Easter Rising banner.
He wrote: "The warrant to search my home address was signed and dated on March 13. If the PSNI/British Army were so concerned about the preservation of any evidence in connection with any so-called investigation, why wait three months?"
McCrory was previously arrested in connection with a 2019 New IRA car bomb attack on Bishop Street courthouse in Derry before being freed without charge.
The gang's leaders in the city have spent the past week trying to play down the significance of the Lyra gun and bomb find, but despite the best efforts of Thomas Mellon, the New IRA boss in the city, the discovery has badly damaged morale.
Rank and file members of the organisation, many of whom are aged under 30, are openly talking about how it has been compromised by informants.
Last autumn police acting on intelligence foiled two bomb bids in the north-west in the space of 48 hours.
A primed New IRA mortar was discovered aimed at Strabane PSNI station a day before a booby-trap device was located in the Creggan estate in Derry.
"It's been a bad week for Tommy Mellon. This latest arms find has hit his men hard," a republican source told Sunday Life.
"They are aware that someone or some people within their inner circle is talking to the cops.
"Even the young ones are openly saying it - something they would never dared to have done before.
"The ballistics on the gun used to kill Lyra McKee could also be very embarrassing for Tommy because they bought it from criminals.
"This shows the hypocrisy of the New IRA, which makes a big deal about threatening criminals yet, behind the scenes, it is doing deals with them."
Sources say the decision by the New IRA to hang onto the gun used to murder Lyra is proof the gang has few weapons.
"If they had a decent amount of guns, that particular one would have been thrown in the River Foyle because the killing was so high-profile," said a Derry republican.
"The fact the New IRA chose to hang onto it shows just how badly armed it is.
"The general consensus is that they have a handful of guns, enough to extort money from criminals but not enough to mount any successful military campaign against the State."
Lyra was gunned down while observing a riot in the Creggan estate in April 2019.
Her radicalised killer, who was aged just 18 at the time, recently became a father for the first time and is living openly in Derry, revelling in his notoriety. Dissident republican Paul McIntyre (52) has been charged with the murder on the basis of joint enterprise, in that he allegedly handed the gun to her killer - a claim he denies.
Detective Superintendent Jason Murphy, who is leading the investigation, said he knows the gunman's identity and believes he may have left DNA evidence on the inside of the weapon.
He added: "The gun jammed as the gunman fired and I know from the video footage that the gunman tried several times to eject the jammed rounds.
"For that reason, I have asked scientists to extend their forensic examination beyond the outside of the gun and forensically examine the inside mechanisms of it to establish whether the gunman, in his haste to clear the blockage, may have left forensic traces inside the gun.
"I know who was involved (and) I know who the gunman is.
"I have asked the scientists to find me the evidence that will enable me to complete the jigsaw of the events of April 18 that I have been building for Lyra's family since the night she was murdered."
Reacting to the discovery of the weapon, Lyra's sister Nichola Corner told UTV: "It's a shock to see what was used to take her out of this world, to end her life, to steal her from all of us".
In a BBC interview, the murdered writer's partner Sara Canning said: "It's strange to think something so small caused so much damage and took so much away."