Reproduction is a key aspect of evolution, but the process is rarely preserved in the fossil record. Organisms fortuitously preserved undergoing reproduction provide an exceptional window illuminating the biology of extinct taxa, especially those with unknown phylogenetic position. Here we report exceptional specimens of chitinozoans (enigmatic Paleozoic organic-walled microfossils) preserved as "test-in-test" morphology, which have previously been interpreted as teratological forms. Application of advanced imaging techniques on newly recovered and reexamined Ordovician materials enabled documentation of critical morphological details of the test's inner ultrastructure for the first time. The results show that the newly observed spongy material and dendritic structure on or inside the chitinozoan test as well as the test wall itself are all made of clustered rounded spherical particles. Morphological details suggest that those specimens represent key stages of new asexual reproductive strategies, hitherto undescribed, which produce either one or several offspring at a time. This observation challenges the prevailing hypothesis that chitinozoans are eggs of cryptic extinct marine metazoans. Instead, it is more plausible that they represent a new isolated group of protists.