The oldest known fossil bird from the Late Triassic (about 225 million years ago) Dockum Formation of Texas, provides insights into the anatomy, evolution and phylogenetic relationships of early birds. In life, this adult bird was about the size of a pheasant (Phasianus) counting its long bony tail. Many characters of the skull show that the Texas species is more closely related to other birds than to any known group of archosaurs. The skull is lightly built, pneumatized, with an enormous orbit and expanded temporal region. The teeth are restricted to the tip of the jaws, the posterior teeth having been lost. The temporal region is modified from the diapsid condition, as in modern birds, where the orbit is confluent with the upper and lower temporal openings because of the breakdown of the temporal arcades. The relatively large brain size and the modification of the brain architecture in avian fashion show neurosensory specializations that may be associated with balance, coordination, flight, agility and high metabolic activity. The new species had binocular vision, which suggests that it was a visually oriented predator. Auditory acuity may be associated with vocal behaviour. The quadrate was streptostylic and the whole upper jaw was moved prokinetically as in modern birds. Among current hypotheses for the relationships of birds among archosaurs, both theropod and crocodilian hypotheses have been supported by shared apomorphies. Some of the avian features in the crocodilian skull may have been acquired convergently because of homoplasy. Conversely, the highly akinetic skull and monimostylic quadrate along with primitive brain architecture in early crocodylomorphs negate its close phyletic relationships with birds. Within archosaurs, the theropods are closest to birds, but just what taxon is the sister group among theropods is uncertain at this time. Numerical cladistic analysis of 30 cranial characters generated a hypothesis of the phylogenetic pattern of early avian evolution. By using theropods and sphenosuchids as comparative outgroups and root for the tree, the analysis confirms the monophyly of the class Aves. Archaeopteryx is the most primitive taxon and is sister group to all other birds. Archaeopteryx, Avimimus and the Texas bird are successively closer to the remaining avian taxa or Ornithurae. Hesperornis, Ichthyornis and Gobipteryx are the Cretaceous representatives of the Ornithurae. The Triassic bird extends the known avian record back at least 75 million years and documents an early stage in the evolution of modern birds. The avian skull evolved in response to two functional requirements: efficient feeding mechanism, leading to the development of cranial kinesis, and neurosensory specializations leading to the enlargement of the braincase and orbit. Cranial kinesis, braincase inflation and otic specialization greatly modified the architecture of early avian skulls from the theropod condition. Phylogenetic analysis suggests that theropods shared a common ancestry with birds, but it is indeterminate from the fossil record whether or not the immediate common ancestor itself was a theropod.