BackgroundThe taxonomic position of the Middle Devonian fish-like animal Palaeospondylus has remained enigmatic, due mainly to the inability to identify homologous cranial elements. This animal has been classified into nearly all of the major vertebrate taxa over a century of heuristic taxonomic research, despite the lack of conclusive morphological evidence.ResultsHere we report the first comparative morphological analysis of hagfish embryos and Palaeospondylus, and a hitherto overlooked resemblance in the chondrocranial elements of these animals; i.e., congruence in the arrangement of the nasal capsule, neurocranium and mandibular arch-derived velar bar. The large ventral skeletal complex of Palaeospondylus is identified as a cyclostome-specific lingual apparatus. Importantly, the overall morphological pattern of the Palaeospondylus cranium coincides well with the cyclostome pattern of craniofacial development, which is not shared with that of crown gnathostomes. Previously, the presence of the vertebral column in Palaeospondylus made its assignment problematic, but the recent identification of this vertebral element in hagfish is consistent with an affinity between this group and Palaeospondylus.ConclusionThese lines of evidence support the hagfish affinity of Palaeospondylus. Moreover, based on the less specialized features in its cranial morphology, we conclude that Palaeospondylus is likely a stem hagfish.Electronic supplementary materialThe online version of this article (doi:10.1186/s40851-016-0057-0) contains supplementary material, which is available to authorized users.