Annelids are among the most disparate animal phyla, encompassing ambush predators, suspension feeders and terrestrial earthworms 1 . Early annelid evolution remains obscure or controversial 2,3 , partly due to discordance between molecular phylogenies and fossils 2,4 . Cambrian annelid fossils have morphologies indicating epibenthic lifestyles, whereas phylogenomics recovers sessile, infaunal and tubicolous taxa as an early diverging grade 5 . Magelonidae and Oweniidae (Palaeoannelida 1 ) are the sister group of all other annelids but contrast with Cambrian taxa in both lifestyle and gross morphology 2,6 . We describe a new fossil polychaete, Dannychaeta tucolus, from the early Cambrian Canglangpu Formation 7 , preserved within delicate, originally organic dwelling tubes. The head has a well-defined spade-shaped prostomium with elongate ventrolateral palps. The body has a wide, stout thorax and elongate abdomen with biramous parapodia with parapodial lamellae. This character combination is shared with extant Magelonidae, and phylogenetic analyses recover Dannychaeta within Palaeoannelida. Dannychaeta is the oldest polychaete unambiguously belonging inside