Chief health officer Kerry Chant said the new strain, which did not match the variant circulating widely across the state, had so far been found in eight people.
Seven of those cases were from one NSW household.
But Dr Chant said there was no indication yet that the variant was any more transmissible or severe than existing strains.
“We’re undertaking some investigations into the source and how the transmission occurred,” she said on Tuesday.
“We’ll update you again when the information is available.”
The revelation came as NSW’s local virus cases bounced back up to 646 on Friday, after two days with numbers in the 500s.
The state’s toll from its Delta outbreak also grew to 414, with the deaths of two women and nine men, aged from their 50s to their 80s.
Dr Chant urged COVID safety amid the excitement of the state re-opening next week after its long virus lockdown.
She said people were looking forward to opening up on Monday but urged everyone to continue wearing masks and maintain physical distancing.
“It’s an exciting time but I caution everyone to do everything safely,” she said.
Premier Dominic Perrottet said NSW would face challenges as the first state leading the way out of months of COVID-19 lockdowns.
“We can’t let perfection be the enemy of the good here,” he told 2GB radio on Friday.
“The alternative to not doing it this way would be that businesses would have to remain closed to well later in the year.”
“This is not going to be complete smooth sailing because no one else has gone down this path.”
As of midnight on Wednesday, 89.4 per cent of people 16 and over in NSW had received their first dose of a vaccine.
Mr Perrottet said the state being on the cusp of 90 per cent first dose jabs made its rates of vaccination among the highest in the world.
Some 856 people are in NSW hospitals with COVID-19 with 170 of them in intensive care and 75 on ventilators.
The Australian Medical Association of NSW said changes to the state’s plan to emerge from lockdown could overwhelm the hospital system and burn out healthcare workers.
“Relaxing restrictions too soon will not be a ‘popular’ decision if it means the number of people contracting the virus and ending up in hospital skyrockets,” AMA NSW President Danielle McMullen said.
But Katherine Gibney from the Doherty Institute said while COVID case numbers would rise as rules were wound back, easing out of lockdown was inevitable.
“Hopefully with high vaccination rates we’ll be protected against the more severe disease and those requiring hospitalisation and ICU but we are expecting these to increase in the coming weeks and couple of months,” Dr Gibney told ABC TV on Friday.
“It has to be done. We can’t live in lockdown indefinitely.”
A revised strategy to reopen NSW includes 10 adult visitors allowed in homes, 30 permitted to gather outdoors, and 100 guests at weddings and funerals.
Indoor swimming pools will be able to open and all school students will be back in the classroom by October 25. All teachers will have to be fully vaccinated by the same date.
From Monday people will be able to travel between Sydney, Shellharbour, Wollongong, the Blue Mountains and the Central Coast but not into the regions.
Restrictions will ease further when 80 per cent of the adult population is fully jabbed, expected about October 25, when 3000 people will be allowed at ticketed outdoor events and nightclubs can reopen, though dancing will not be permitted.
Masks will not be required in office buildings in an attempt to encourage workers back to Sydney’s CBD.
These freedoms will apply only for the fully vaccinated until December 1, when freedoms are set to be restored for the unvaccinated.