Field and flume experiments with modern Nautilus pompilius establish two prerequisites to recognize in situ preservation of fossil cephalopod shells (soft parts were within body chamber in situ at the time of fossilization): occurrence of the upper jaw within the body chamber and the position of jaws within the body chamber. Morphology of shells and jaws in modern and fossil nautiloids is so similar that these prerequisites can be applied for fossil nautiloids and provide implications for ammonoids. The upper jaws of Nautilus start to move at a water velocity of > 0.2 m/s, when the shells are reoriented with the aperture downstream; jaws are therefore unlikely to be secondarily deposited near the shell aperture by bottom currents. The lower jaws, moved at the velocity of > 0.1 m/s, can be deposited around the shell aperture by weak current (0.1–0.2 m/s in velocity), but never enter the inside of body chamber. Neither jaw is likely to be separately and selectively displaced from the inside of the body chamber through scavenging of the soft parts by burrowing infaunal animals. An upper jaw preserved inside the body chamber, together with a lower jaw, is thus a reliable indicator of in situ preservation; a sole lower jaw preserved around the shell aperture is likely to be secondarily deposited. Sedimentary structures inferring rapid burial events and jaw size are useful as additional evidence. Smaller jaws were more likely to be displaced from the body chamber by scavenging by infaunal animals after in situ burial, so that smaller jaws preserved within the body chamber suggest less scavenging. These findings are crucial to interpreting the taphonomic history and palaeo-ecology of fossil cephalopods.