Abstract Ginglymodians (e.g. gars) are a group of holostean fishes with a rich fossil history in the Mesozoic. The resolution of interrelationships among extinct ginglymodians is central to the problem of understanding the origin of this clade. Here, a new fossil ginglymodian, Diandongichthys ocellatus gen. et sp. nov., is described based on 13 well-preserved specimens from the Early-Middle Triassic (Anisian) marine deposits exposed in Luoping, eastern Yunnan, China. The discovery documents one of the oldest and smallest ginglymodians hitherto known from the Middle Triassic, with a maximum standard length of 41 mm. Diandongichthys, although displaying several synapomorphies of ginglymodians, retains some primitive states with respect to other early ginglymodians (e.g. a short snout without anterior infraorbitals, a maxilla ending below the orbit, and a median gular); consequently, it is nested at the base of the Ginglymodi in this phylogenetic study. Besides body shape, some autapomorphies on the cranial bones and caudal fin easily distinguish Diandongichthys from other members of this clade. The discovery provides new insights into the origin and early diversification of ginglymodian fishes.