Theropods have traditionally been assumed to have lost manual digits from the lateral side inward, which differs from the bilateral reduction pattern seen in other tetrapod groups. This unusual reduction pattern is clearly present in basal theropods, and has also been inferred in non-avian tetanurans based on identification of their three digits as the medial ones of the hand (I-II-III). This contradicts the many developmental studies indicating II-III-IV identities for the three manual digits of the only extant tetanurans, the birds. Here we report a new basal ceratosaur from the Oxfordian stage of the Jurassic period of China (156-161 million years ago), representing the first known Asian ceratosaur and the only known beaked, herbivorous Jurassic theropod. Most significantly, this taxon possesses a strongly reduced manual digit I, documenting a complex pattern of digital reduction within the Theropoda. Comparisons among theropod hands show that the three manual digits of basal tetanurans are similar in many metacarpal features to digits II-III-IV, but in phalangeal features to digits I-II-III, of more basal theropods. Given II-III-IV identities in avians, the simplest interpretation is that these identities were shared by all tetanurans. The transition to tetanurans involved complex changes in the hand including a shift in digit identities, with ceratosaurs displaying an intermediate condition.