A defining feature of vertebrates (craniates) is a pronounced head that is supported and protected by a robust cellular endoskeleton. In the first vertebrates, this skeleton probably consisted of collagenous cellular cartilage, which forms the embryonic skeleton of all vertebrates and the adult skeleton of modern jawless and cartilaginous fish. In the head, most cellular cartilage is derived from a migratory cell population called the neural crest, which arises from the edges of the central nervous system. Because collagenous cellular cartilage and neural crest cells have not been described in invertebrates, the appearance of cellular cartilage derived from neural crest cells is considered a turning point in vertebrate evolution. Here we show that a tissue with many of the defining features of vertebrate cellular cartilage transiently forms in the larvae of the invertebrate chordate Branchiostoma floridae (Florida amphioxus). We also present evidence that during evolution, a key regulator of vertebrate cartilage development, SoxE, gained new cis-regulatory sequences that subsequently directed its novel expression in neural crest cells. Together, these results suggest that the origin of the vertebrate head skeleton did not depend on the evolution of a new skeletal tissue, as is commonly thought, but on the spread of this tissue throughout the head. We further propose that the evolution of cis-regulatory elements near an ancient regulator of cartilage differentiation was a major factor in the evolution of the vertebrate head skeleton.