Settling and metamorphosing larvae of the pterobranch hemichordate Rhabdopleura normani from Bermuda were examined with light microscopy, providing the first detailed description of the morphological changes during larval metamorphosis in pterobranchs. The swimming larvae settle within 24 h after being released from the parent tube. The settled larva immediately everts the ventral depression and surrounds itself with a translucent, sealed cocoon. During metamorphosis, which takes place over 7–10 days within the protective cocoon, structural changes occur in the following sequence: (1) differentiation of the oral shield from the anterior region; (2) budding of the two arms from the mid-dorsal surface; (3) development of the posterior stalk from the adhesive organ; (4) budding of the tentacles on the arms; (5) formation of the pharynx from invaginated ectoderm; (6) formation of the gut and pericardium from the remaining mesenchyme. The gut is the last structure to become functional. The larva relies on stored nutrients throughout metamorphosis. The metamorphosed juvenile builds a tube at an opening in the cocoon and begins to feed. Similarities with lecithotrophic bryozoan and enteropneust larvae are discussed.