The notable disparity of animal body plans can be traced back to the morphological innovations during the Cambrian explosion and represented by a number of soft-bodied and skeletal fossils that provide a compelling narrative for animal evolution. Chancelloriids are an extinct group of Cambrian animals characterized by a distinctive sclerite-bearing, flexible integument and a single apical opening leading into a central cavity devoid of unequivocal internal organs. Their phylogenetic position within the Metazoa remains controversial. Here we show new exceptionally-preserved fossils from the 518-million-year-old Chengjiang biota of China, which corroborate the unique bauplan pattern of chancelloriids, and reveal exquisite integument microstructures including tiny protuberances and associated wrinkle-like structures that are interpreted to be related to epithelial contractions. A phylogenetic study assessing the interrelationship of chancelloriids among metazoans using modern cladistic methods is conducted to the best of our knowledge. The result suggests that chancelloriids constitute an evolutionary clade branched above and close to the Placozoa. Therefore, the enigmatic Cambrian chancelloriids represent an extinct, phylum-level basal Epitheliozoa and stem-group Eumetazoa. Their body plan has filled one of the anatomical gaps between the Placozoa and living eumetazoans within the evolutionary tree of animals.