Exceptional preservation of soft-bodied Cambrian chordates provides our only direct information on the origin of vertebrates. Fossil chordates from this interval offer crucial insights into how the distinctive body plan of vertebrates evolved, but reading this pre-biomineralization fossil record is fraught with difficulties, leading to controversial and contradictory interpretations. The cause of these difficulties is taphonomic: we lack data on when and how important characters change as they decompose, resulting in a lack of constraint on anatomical interpretation and a failure to distinguish phylogenetic absence of characters from loss through decay. Here we show, from experimental decay of amphioxus and ammocoetes, that loss of chordate characters during decay is non-random: the more phylogenetically informative are the most labile, whereas plesiomorphic characters are decay resistant. The taphonomic loss of synapomorphies and relatively higher preservation potential of chordate plesiomorphies will thus result in bias towards wrongly placing fossils on the chordate stem. Application of these data to Cathaymyrus (Cambrian period of China) and Metaspriggina (Cambrian period of Canada) highlights the difficulties: these fossils cannot be placed reliably in the chordate or vertebrate stem because they could represent the decayed remains of any non-biomineralized, total-group chordate. Preliminary data suggest that this decay filter also affects other groups of organisms and that ‘stem-ward slippage’ may be a widespread but currently unrecognized bias in our understanding of the early evolution of a number of phyla.