We describe here two new specimens of the mammal Deltatheridium pretrituberculare from the Late Cretaceous period of Mongolia. These specimens provide information on tooth replacement in basal therian mammals and on lower jaw and basicranial morphology. Deltatheroidans, known previously from isolated teeth, partial rostra and jaws from the late Cretaceous of Asia and possibly North America, have been identified variously as eutherians, as basal metatherians (the stem-based clade formed by marsupials and their extinct relatives), or as an outgroup to both eutherians and metatherians. Resolution of these conflicting hypotheses and understanding of the early evolution of the therian lineage have been hampered by a sparse fossil record for basal therians. The new evidence supports metatherian affinities for deltatheroidans and allows a comprehensive phylogenetic analysis of basal metatherians and marsupials. The presence of specialized marsupial patterns of tooth replacement and cranial vascularization in Deltatheridium and the basal phylogenetic position of this taxon indicate that these features are characteristic of Metatheria as a whole. Other morphological transformations recognized here secure the previously elusive diagnosis of Metatheria. The new specimens of Deltatheridium illustrate the effectiveness of fairly complete fossil specimens in determining the nature of early evolutionary events.