A new reconstruction of Protolyellia (psammocoral) from the Mickwitzia sandstone, Early Cambrian of south-central Sweden, is proposed. Observations, conceptual analysis and physical modelling indicate that the distinctive honeycomb or (less frequently) ridge sculpture of the upper side of the sand-button was a wrinkle pattern in a flexible epithelium. Wrinkling was caused by contraction of a subepithelial muscle layer joined to the epithelium by connective tissue. Fine-grained sand particles adhering on, or embedded within, the epithelium preserved its surface relief after the soft parts decomposed. The sand-bearing epithelium covered a subcylindrical structure attached around the periphery of the sand-button and extending upwards. This structure is occasionally preserved felled horizontally near a sand-button, but is more commonly found as isolated shreds. Sudden burial caused the lower portion of this structure to contract and wrinkle against the tissues containing the sand-button. After the soft parts decomposed, sediment compaction pasted the wrinkled layer onto the sand-button, thus producing the typical preservation mode. The wrinkle pattern of Protolyellia differs from those of Recent cnidarians, and suggests that Protolyellia did not possess mesenteries. Protolyellia may be more distantly related to modern cnidarians than previously assumed. In addition, alternative affinities with Ediacaran frond-bearing forms cannot be excluded.