The Iniopterygia are Palaeozoic chondrichthyans whose morphology and relationships are poorly understood. The morphology of two new taxa of Iniopterygidae, Rainerichthys zangerli and Papilionichthys stahlae, from the Upper Mississippian of Montana is now described. They exhibit the iniopterygian synapomorphy of dorsolaterally placed pectoral fins. They also display a laterally compressed head and body, a homocercal tail, and a single aspinous dorsal fin originating at approximately mid-body. These taxa differ in upper dental elements, bony cranial plates, body squamation, buccopharyngeal denticles, cranial linking cartilages, palatoquadrate shape, pterygoid articulation, pectoral axis and pectoral girdle shape, and in the robustness of branchial and suprascapular cartilages. The neurocranium is unique among known chondrichthyans in presenting anterior ethmosphenoid and posterior otico-occipital units separated by an intracranial joint. A complete otico-occipital fissure is found posteriorly. One to two pairs of upper parasymphysial whorls and one median lower premandibular symphysial whorl are present. Symphysial whorls were mobile and the cranial complex appears to have been kinetic. Cladistic assessment places these new taxa as basal chondrichthyans below the divergence of the Elasmobranchii and the Euchondrocephali. The range of morphology within known iniopterygians supports rapid diversification and niche specialization in this group of atypical chondrichthyans.