Tullimonstrum gregarium is an iconic soft-bodied fossil from the Carboniferous Mazon Creek Lagerstätte (Illinois, USA). Despite a large number of specimens and distinct anatomy, various analyses over the past five decades have failed to determine the phylogenetic affinities of the 'Tully monster', and although it has been allied to such disparate phyla as the Mollusca, Annelida or Chordata, it remains enigmatic. The nature and phylogenetic affinities of Tullimonstrum have defied confident systematic placement because none of its preserved anatomy provides unequivocal evidence of homology, without which comparative analysis fails. Here we show that the eyes of Tullimonstrum possess ultrastructural details indicating homology with vertebrate eyes. Anatomical analysis using scanning electron microscopy reveals that the eyes of Tullimonstrum preserve a retina defined by a thick sheet comprising distinct layers of spheroidal and cylindrical melanosomes. Time-of-flight secondary ion mass spectrometry and multivariate statistics provide further evidence that these microbodies are melanosomes. A range of animals have melanin in their eyes, but the possession of melanosomes of two distinct morphologies arranged in layers, forming retinal pigment epithelium, is a synapomorphy of vertebrates. Our analysis indicates that in addition to evidence of colour patterning, ecology and thermoregulation, fossil melanosomes can also carry a phylogenetic signal. Identification in Tullimonstrum of spheroidal and cylindrical melanosomes forming the remains of retinal pigment epithelium indicates that it is a vertebrate; considering its body parts in this new light suggests it was an anatomically unusual member of total group Vertebrata.