Researchers linked one of the most "bizarre-looking" fossils ever discovered to a group of modern animals for the first time.

The worm-like fossil has legs, spikes, and a distinguishable head, the University of Cambridge reported. Researchers linked the mysterious creature to modern day tropical velvet worms (onychophorans). Hallucigenia and other legged worms, known collectively as lobopodians, have confused scientists on their connection to each other and other modern animals.

Hallucigenia lived about 505 million during the Cambrian Explosion, in which there was a rapid evolution of major species groups. These specific fossils were found in the Burgess Shale located in Canada's Rocky Mountains. A new study of the creature's claws revealed an organization similar to today's velvet worms, where layers of cuticle are stacked on each other.

"It's often thought that modern animal groups arose fully formed during the Cambrian Explosion," said Martin Smith of the University's Department of Earth Sciences, the paper's lead author. "But evolution is a gradual process: today's complex anatomies emerged step by step, one feature at a time. By deciphering 'in-between' fossils like Hallucigenia, we can determine how different animal groups built up their modern body plans."

Hallucigenia were believed to be an ancestor of velvet worms, but researchers have had trouble linking them together; their claws had never been studied in detail before. The claws proved to be the "smoking gun" linking the ancient species to their modern relatives, Smith said.

"An exciting outcome of this study is that it turns our current understanding of the evolutionary tree of arthropods - the group including spiders, insects and crustaceans - upside down," said Javier Ortega-Hernandez, the paper's co-author. "Most gene-based studies suggest that arthropods and velvet worms are closely related to each other; however, our results indicate that arthropods are actually closer to water bears, or tardigrades, a group of hardy microscopic animals best known for being able to survive the vacuum of space and sub-zero temperatures - leaving velvet worms as distant cousins." 

The findings were published in the journal Nature.