Divers found the flight data recorder under the wreckage of one of the plane's wings, said Bambang Soelistyo, the head of Indonesia's search and rescue agency.
The search teams have also found but not yet recovered the other key source of information about the plane: the cockpit voice recorder, said Mardjono Siswosuwarno, the chief investigator into the crash.
The voice recorder is underneath debris, he said, expressing hope that it could be retrieved easily.
The two devices, known popularly as black boxes, are seen as crucial to unraveling the mystery of what brought down Flight QZ8501 as it flew toward Singapore from the Indonesian city of Surabaya with 162 people on board.
Finding the data recorder is "a huge step in the right direction for investigators," said CNN aviation correspondent Rene Marsh. "It gives them so much information that they didn't have before."
Coupled with the debris that's already been collected, the data recorder will enable investigators to "begin to paint the picture of exactly what happened when things went terribly wrong for this aircraft," Marsh said.
Recorder's location 'is a clue'
The data recorder is expected to provide a vast range of information about what the plane was doing, including its air speed, engine performance and the cabin pressure.
The discovery of the device under the wreckage of a wing is significant, according to Mary Schiavo, a former inspector general of the U.S. Department of Transportation.
"That itself is a clue, because I think that pretty much indicates that the plane broke apart when it hit the water," she said, adding that if the aircraft had broken up at a high altitude, investigators wouldn't "have found the wreckage that close together."
One Indonesian search official, who goes by the single name of Supriyadi, said the debris pattern suggests the aircraft "exploded" on impact.
But the country's transportation investigators said it was premature to speculate about what had happened, and one expert questioned the search official's choice of words.
"The word 'exploded' I think maybe loses a little bit in translation," said David Soucie, a former Federal Aviation Administration safety inspector. "I think really what he's meaning is a rupture from the impact itself."
"As with any hollow object hitting something very hard, the pressure differential between the outside and the inside is very significant and it'll actually tear apart the aircraft on the top," Soucie told CNN. "That may be what he's referring to."
Reams of data
The cockpit voice recorder is expected to give insight into how the pilots responded to the crisis that brought down the plane. It captures all sounds on the flight deck, notably conversations between the crew members.
The flight data recorder is expected to be taken to a lab in Jakarta, the Indonesian capital, for analysis.
Once the information is downloaded, investigators should have "a pretty good idea within a couple of days" of what happened aboard the plane, Schiavo said.
The devices usually contain hundreds of parameters and thousands of data points, she said, that look a bit like an EKG when they're printed out.
But Schiavo added that she didn't think officials would release any information publicly for a couple of weeks.
French aviation experts are helping the Indonesian investigation, which also expected to involve Airbus, the manufacturer of the downed plane, an A320-200.
The tail section of the aircraft, which houses the black boxes, was lifted from the Java Sea on Saturday. But searchers didn't find the flight recorders inside it.
The flight data recorder was found about 2.5 kilometers (1.5 miles) from the location of the tail, according to Soelistyo, the head of the search agency.
Most bodies still missing
Searchers are still looking for the plane's fuselage, where many of the bodies of those on board the plane might be located.
A total of 48 bodies have so far been recovered from the sea, some of them still strapped into seats. Authorities have identified most of them.
Eben Tanapurtra, who lost seven family members in the disaster, told CNN that he was happy to hear the flight data recorder has been found but that his family and others hope authorities won't focus only on the black boxes.
"Please, please, continue the search for the missing bodies," he said. "We understand that the black box is crucial and so important for investigation. But please, do not consider the efforts to find the bodies as a less important thing."
Bad weather has hampered the search efforts for the aircraft, which are now in their 16th day. Flight QZ8501, operated by AirAsia's Indonesian affiliate, went down on December 28.
The pilot had requested permission to turn and climb to a higher altitude minutes before contact was lost, according to Indonesian officials.