Genes of the Hox cluster are restricted to the animal kingdom and play a central role in axial patterning in divergent animal phyla(1). Despite its evolutionary and developmental significance, the origin of the Hox gene cluster is obscure. The consensus is that a primordial Hox cluster arose by tandem gene duplication close to animal origins(2-5). Several homeobox genes with high sequence identity to Hox genes are found outside the Hox cluster and are known as ＇dispersed＇ Hox-like genes; these genes may have been transposed away from an expanding clusters. Here we show that three of these dispersed homeobox genes form a novel gene cluster in the cephalochordate amphioxus, We argue that this ＇ParaHox＇ gene cluster is an ancient paralogue (evolutionary sister) of the Hox gene cluster; the two gene clusters arose by duplication of a ProtoHox gene cluster. Furthermore, we show that amphioxus ParaHox genes have co-linear developmental expression patterns in anterior, middle and posterior tissues. We propose that the origin of distinct Hox and ParaHox genes by gene-duster duplication facilitated an increase in body complexity during the Cambrian explosion.