The medal awarded to Joseph Watt is expected to sell for up to £160,000.
His medals and a gold pocket watch are up for sale at Spink in Bloomsbury, London, tomorrow.
Captain Watt, from Gardenstown, Banffshire, was awarded the VC in 1917 for his part in one of the great David versus Goliath battles of the war.
He became a national hero on May 15, 1917, when he engaged the Austro-Hungarian cruiser Novaro in his 87ft fishing boat Gowanlea.
The cruiser was 428ft long – five times bigger than the Gowanlea.
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