A fossil discovery in the mid-Cretaceous Blackleaf Formation of southwest Montana, USA, has yielded the first trace and body fossil evidence of burrowing behaviour in a dinosaur. Skeletal remains of an adult and two juveniles of Oryctodromeus cubicularis gen. et sp. nov. a new species of hypsilophodont-grade dinosaur, were found in the expanded distal chamber of a sediment-filled burrow. Correspondence between burrow and adult dimensions supports Oryctodromeus as the burrow maker. Additionally, Oryctodromeus exhibits features of the snout, shoulder girdle and pelvis consistent with digging habits while retaining cursorial hindlimb proportions. Association of adult and young within a terminal chamber provides definitive evidence of extensive parental care in the Dinosauria. As with modern vertebrate cursors that dig, burrowing in Oryctodromeus may have been an important adaptation for the rearing of young. Burrowing also represents a mechanism by which small dinosaurs may have exploited the extreme environments of polar latitudes, deserts and high mountain areas. The ability among dinosaurs to find or make shelter may contradict some scenarios of the Cretaceous-Paleogene impact event. Burrowing habits expand the known range of nonavian dinosaur behaviours and suggest that the cursorial ancestry of dinosaurs did not fully preclude the evolution of different functional regimes, such as fossoriality.