Research by scholars from the University of Arizona and London Natural History Museum say the fossil, from the famous Chengjiang formation near Kunming in southwest China, is of a creature that crawled or swam in ancient oceans.
The fossil reveals the ancestors of chelicerates -- spiders, scorpions and their kin -- branched off from the family tree of other arthropods -- insects, crustaceans and millipedes -- more than a half billion years ago.
Writing in the journal Nature, the researchers report the fossil belongs to an extinct group of marine arthropods known as megacheirans (Greek for "large claws") and solves the longstanding mystery of where this group fits in the tree of life.
"We now know that the megacheirans had central nervous systems very similar to today's horseshoe crabs and scorpions," senior study author Nicholas Strausfeld of of the University of Arizona said. "This means the ancestors of spiders and their kin lived side by side with the ancestors of crustaceans in the Lower Cambrian.
"Our new find is exciting because it shows that mandibulates (to which crustaceans belong) and chelicerates were already present as two distinct evolutionary trajectories 520 million years ago, which means their common ancestor must have existed much deeper in time," Strausfeld said.