The fossil, from Chengjiang in southern China, is of a probable 'chancelloriid', a group of bizarre, balloon-shaped animals with an outer skeleton of defensive spines.
The animal was flattened during the fossilisation process so that it looks like a squashed bird's nest.
The research team led by Professor Xianguang Hou from the Yunnan University named the species Nidelric pugio to honour the late Professor Richard Aldridge, a palaeontologist and keen ornithologist formerly of the University of Leicester.
In southern China, rocks 520 million years old in Chengjiang County, Yunnan Province yield a diverse array of fossils preserved with traces of their soft anatomy, including their legs, eyes, guts and even brains.
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Amongst the fossils are many animals that can be related to modern forms, including distant relatives of arthropods such as crabs and lobsters, and a wide variety of worms.
These fossils provide an unprecedented view of life in Earth's ancient seas.
"We usually only get the broken-up remains of ancient animal skeletons," Tom Hearing, a PhD student from the Department of Geology who is working on the skeletons of Cambrian fossils, said.
"With this specimen we can see how all the different parts of the skeleton stuck together. It tells us much about how early animals functioned, how they might have interacted with other animals, and how they might have protected themselves from predators," Hearing added.