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Summary The evolution of segmentation in Crustacea, that is, the formation of sclerotized and jointed body somites and arrangement of somites into tagmata, is viewed in light of historical traits and functional constraints. The set of Early to Late Cambrian ‘Orsten’ arthropods have informed our current views of crustacean evolution considerably. These three-dimensionally preserved fossils document ancient morphologies, as opposed to purely hypothetical models and, because of the unusual preservation of larval stages, provide us with unparalleled insight into the morphogenesis of body somites and their structural equipment. The variety of evolutionary levels represented in the ‘Orsten’ including lobopodians, tardigrades, and pentastomids also allows phylogenetic interpretations far beyond the Crustacea. The ‘Orsten’ evidence and data from representatives of the Lower Cambrian Chengjiang biota in southwestern China, including phylogenetically earlier forms, form the major source of our morphology-based review of structural and functional developments that led toward the Crustacea. The principal strategy of arthropods is the simultaneous development of head somites, as expressed in a basal “head larva,” and a successive addition of postcephalic somites from a preterminal budding zone with progressive maturation of metameric structures. This can be recognized in the developmental patterns of extant and fossil representatives of several euarthropod taxa, particularly crustaceans, trilobites, and chelicerates (at least basally). The development of these taxa points to an early somite-poor and free-living hatching stage. Embryonic development to a late stage within an egg, as occurring in recent onychophorans and certain in-group euarthropods, is regarded as achieved several times convergently.