Named Saccorhytus, after the sack-like features created by its elliptical body and large mouth, the species is new to science and was identified from microfossils found in China.
It is thought to be the most primitive example of a so-called "deuterostome" - a broad biological category that encompasses a number of sub-groups, including the vertebrates.
The study by researchers from University of Cambridge in the UK and Northwest University in China suggests Saccorhytus was the common ancestor of a huge range of species, and the earliest step yet discovered on the evolutionary path that eventually led to humans, hundreds of millions of years later.
"We think that as an early deuterostome this may represent the primitive beginnings of a very diverse range of species, including ourselves," Simon Conway Morris, Professor at University of Cambridge, said.
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"To the naked eye, the fossils we studied look like tiny black grains, but under the microscope the level of detail is jaw-dropping. All deuterostomes had a common ancestor, and we think that is what we are looking at here," said Morris.
Most other early deuterostome groups are from about 510 to 520 million years ago, when they had already begun to diversify into not just the vertebrates, but the sea squirts, echinoderms (animals such as starfish and sea urchins) and hemichordates (a group including things like acorn worms).
The Saccorhytus microfossils were found in Shaanxi Province, in central China, and pre-date all other known deuterostomes, researchers wrote in the study published in journal Nature.
In the early Cambrian period, the region would have been
a shallow sea. Saccorhytus was so small that it probably lived in between individual grains of sediment on the sea bed.
The study suggests that its body was bilaterally symmetrical - a characteristic inherited by many of its descendants, including humans - and was covered with a thin, relatively flexible skin.
Perhaps its most striking feature, however, was its rather primitive means of eating food and then dispensing with the resulting waste.
Saccorhytus had a large mouth, relative to the rest of its body, and probably ate by engulfing food particles, or even other creatures.
A crucial observation are small conical structures on its body. These may have allowed the water that it swallowed to escape and so were perhaps the evolutionary precursor of the gills we now see in fish.