The relationship of limbed vertebrates (tetrapods) to lobe-finned fish (sarcopterygians) is well established, but the origin of major tetrapod features has remained obscure for lack of fossils that document the sequence of evolutionary changes. Here we report the discovery of a well-preserved species of fossil sarcopterygian fish from the Late Devonian of Arctic Canada that represents an intermediate between fish with fins and tetrapods with limbs, and provides unique insights into how and in what order important tetrapod characters arose. Although the body scales, fin rays, lower jaw and palate are comparable to those in more primitive sarcopterygians, the new species also has a shortened skull roof, a modified ear region, a mobile neck, a functional wrist joint, and other features that presage tetrapod conditions. The morphological features and geological setting of this new animal are suggestive of life in shallow-water, marginal and subaerial habitats.