Zhang Daqian's Portrait of Avalokitesvara from Dunhuang Grottoes will auction at Sotheby's Chinese Paintings and Calligraphy sale in New York on September 18.
The lot was formerly the centrepiece of the collection of National Revolutionary Army general Zhu Shaoliang and carries an estimate of $2.6m-3.2m.
It dates to 1943 and was copied from the wall of the Dunhuang Caves, which are covered with Buddhist art dating back over 1,000 years.
Daqian (1899-1983) was commissioned to repaint some of the frescoes in 1941, a job that took him two and a half years to complete.
As well as being one of the greatest painters of his generation, Daqian is widely credited as the most talented forger of the 20th century.
His interpretations of the styles of Chinese artists from across history are considered near indistinguishable from the real thing.
It is thought a large number of his forgeries remain undetected in museums and collections around the world.
A set of hanging scrolls by Daqian sold for $10.4m at Christie's New York in May last year. His auction record stands at $24.6m for Lotus and Mandarin Ducks, which sold in 2011.
The sale is taking place as part of Asian Art Week, which will also include a sale of Fine Chinese Paintings.
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