The specimen confirms that spiders and scorpions had related ancestors, but the species branched out over a half billion years ago.
Greg Edgecombe from the Natural History Museum in London explained that nervous systems tend to be similar between major groups of animals. Paleontologists use this to work out how species are related.
"The nervous system is one of the more reliable tool-kits we have. We were trying to investigate whether there was evidence for the preservation of neural tissues from very early parts of the animal fossil record," Edgecombe told BBC News.
"What we've been working with is fossils with very fine anatomical preservation from the Cambrian period. These have given us information about brains, the nerve cords and the neural tissue that goes into the eyes."
The fossil was discovered in South China and is part of the genus Alalcomenaeus, a group that had segmented bodies equipped with a dozen pairs of appendages which enabled the creatures to swim or crawl.
The fossil represents an extinct group of marine arthropods known as megacheirans, Greek for "large claws." It is also currently the earliest sample of a nervous system.
The remains were later placed in a CT scanner and compared with other arthropods in order to understand its evolution.
"By having access to the nervous system it allows us to study the evolutionary relationships of very ancient fossils using the same kind of information that we would use for living animals," Edgecombe said.