From the Jerusalem Post:

An ancient quarry covering approximately one dunam and dating back to the end of the Second Temple period was uncovered during excavations on Shmuel Hanavi Street in Jerusalem ahead of the construction of residential buildings, Israel Antiquities Authority said on Monday.
According to Dr. Ofer Sion of the Authority, who directed the dig along with Yehuda Rapuano, the 2,300 year-old site was probably the source of the stones used to build the Second Temple walls.
“The immense size of the stones indicates it was highly likely that the large stones that were quarried at the site were destined for use in the construction of [legendary builder of ancient Jerusalem King] Herod’s magnificent projects in Jerusalem, including the Temple walls,” Sion said.

The article continues here.

The article gives conflicting dates for the quarry.  It is dated to the “end of the Second Temple period,” which is the years before A.D. 70.  But it was used for Herod’s projects, and he ruled in Jerusalem from 37-4 B.C.  But the site is 2,300 years old.  Given the monumental construction of Herod’s rule, I would guess that it dates from this period.

The location of the site is Shmuel Hanavi Street, which is a major thoroughfare about one mile north-northwest of Damascus Gate, running between Sanhedria and Mea Shearim.

Other major quarries from roughly the same time period have been discovered in Ramat Shlomo (location, photos), Sanhedria, and “Solomon’s Quarries” near Damascus Gate.  The quarry at Ketef Hinnom (now covered by the Menahem Begin Heritage Center) may date to the same period.

UPDATE: Joe Lauer notes that a couple of high-resolution images are available from the Israel Antiquities Authority here (zip).  The press release is posted here, and Arutz-7 also has an article.