The Jurassic Yanliao theropods have offered rare glimpses of the early paravian evolution and particularly of bird origins, but, with the exception of the bizarre scansoriopterygids, they have shown similar skeletal and integumentary morphologies. Here we report a distinctive new Yanliao theropod species bearing prominent lacrimal crests, bony ornaments previously known from more basal theropods. It shows longer arm and leg feathers than Anchiornis and tail feathers with asymmetrical vanes forming a tail surface area even larger than that in Archaeopteryx. Nanostructures, interpreted as melanosomes, are morphologically similar to organized, platelet-shaped organelles that produce bright iridescent colours in extant birds. The new species indicates the presence of bony ornaments, feather colour and flight-related features consistent with proposed rapid character evolution and significant diversity in signalling and locomotor strategies near bird origins.