But the species also had modern human features, the researchers said, including long legs and a spine suited for long-distance running and walking.
The human ancestor also had more humanlike body proportions than pre-Homo species.
Animal fossils unearthed at the site show the region was well populated with mammals, including extinct species of hyenas, wolves, bears, deer, and giraffes.
The fossil skulls of fearsome saber-tooth cats have also been found.
Carcasses of animals killed by these predators may have been an important source of meat for the ancestors, the team says.
"The Dmanisi people could have followed them as scavengers," Lordkipanidze said.
The hominins may even have hunted large animals, he added.
Broken fossil bones and remains marked by crude stone tools indicate some of the mammals were butchered for their flesh.
The team's study of the fossils will appear in this week's issue of the journal Nature.
The Dmanisi ancestors' smaller body and brain size are hard to explain, said anthropologist Daniel Lieberman of Harvard University, who was not involved in the study.
One possibility is that the Dmanisi were smaller simply because they were adapted to a different type of environment, Lieberman writes in an accompanying article in Nature.
Alternatively, he says, the Dmanisi fossils may represent a different species.
"My hunch," he writes, "is that the Dmanisi and early African H. erectus fossils represent different populations of a single, highly variable species."
Lordkipanidze said such variation may indicate the first human ancestors left Africa much earlier than previously thought and so were an earlier species than Homo erectus.
Erik Trinkhaus of Washington University in St. Louis, Missouri, however, said he doesn't find the new fossils so surprising.
The primitive features identified in the study fall within the range of variation previously seen in early human ancestors, he argued.
"They were little people with little brains—that doesn't really surprise me," Trinkhaus said.
"We have other specimens of H. erectus that were not very much larger."
He agreed that the species likely slept in trees.
"If you're a primate and you sleep on the ground at night, you don't wake up in the morning," Trinkhaus added.
"What is clear is that the overall anatomy is primarily for walking on the ground," he said.
Trinkhaus suggested environmental changes around the time of the Dmanisi enabled human ancestors to extend their range beyond Africa.
"Clearly something happened to allow [human ancestors] to exploit more varied and more seasonal environments around this time period, apparently associated with the emergence of H. erectus," Trinkhaus said.
"The Dmanisi material is one very rich reflection of that," he said.
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