The skull of living crocodylians is highly solidified and the jaw closing muscles are enlarged, allowing for prey capture by prolonged crushing between the jaws. Living species are all semi-aquatic, with sprawling limbs and a broad body that moves mainly from side-to-side; however, fossils indicate that they evolved from terrestrial forms. The most cursorial of these fossils are small, gracile forms often grouped together as the Sphenosuchia, with fully erect, slender limbs; their relationships, however, are poorly understood. A new crocodylomorph from deposits in northwestern China of the poorly known Middle Jurassic epoch possesses a skull with several adaptations typical of living crocodylians. Postcranially it is similar to sphenosuchians but with even greater adaptations for cursoriality in the forelimb. Here we show, through phylogenetic analysis, that it is the closest relative of the large group Crocodyliformes, including living crocodylians. Thus, important features of the modern crocodylian skull evolved during a phase when the postcranial skeleton was evolving towards greater cursoriality, rather than towards their current semi-aquatic habitus.