It is based on the species Hallucigenia sparsa, the fossil of which was discovered by Charles Doolittle Walcott in 1911 from the Burgess Shale of British Columbia.

The name Hallucigenia was created by Simon Conway Morris in 1977, from which the family was erected after discoveries of other hallucigeniid worms from other parts of the world.

The most prominent feature of the worm, its body projections were particularly difficult to understand as there were two distinct groups, the tube-like tentacles and thornlike spines.

[7] In 1991, Lars Ramsköld (Uppsala University, Sweden) and Hou Xian-guang (Nanjing Institute of Geology and Palaeontology, Chinese Academy of Sciences) described a new specimen, Microdictyon, from the lower Cambrian Maotianshan shales.

[8][9] They were also able to work out that by inverting the specimen upside down, the so-called tentacles were actually walking legs (called lobopods) and the spines were protective armours on the back.

[5][10] The reinterpretation was strengthened by the discovery of new species Cardiodictyon catenulum from the same Maotianshan shales, reported by Hou, Ramsköld and Jan Bergström in the same year.