Hyoliths are a taxonomically problematic group of Palaeozoic lophotrochozo-ans that are among the first shelly fossils to appear in the Cambrian period. On the basis of their distinctive exoskeleton, hyoliths have historically been classified as a separate phylum with possible affinities to the molluscs, sipunculans or lophophorates-but their precise phylogenetic position remains uncertain. Here, we describe a new orthothecide hyolith from the Chengjiang Lagerstatte (Cambrian Series 2 Stage 3), Pedunculotheca diania Sun, Zhao et Zhu gen. et sp. nov., which exhibits a non-mineralized attachment structure that strikingly resembles the brachiopod pedicle-the first report of a peduncular organ in hyoliths. This organ establishes a sessile, suspension feeding ecology for these orthothecides and-together with other characteristics (e.g. bilaterally symmetrical bivalve shell enclosing a filtration chamber and the differentiation of cardinal areas)-identifies hyoliths as stem-group brachiopods. Our phylogenetic analysis indicates that both hyoliths and crown brachiopods derived from a tommotiid grade, and that the pedicle has a single origin within the brachiopod total group.