Tyrannosaurid theropods are characterized by a generalized body plan, and all well-known taxa possess deep and robust skulls that are optimized for exerting powerful bite forces. The fragmentary Late Cretaceous Alioramus appears to deviate from this trend, but its holotype and only known specimen is incomplete and poorly described. A remarkable new tyrannosaurid specimen from the Maastrichtian (Late Cretaceous) of Mongolia, including a nearly complete and well-preserved skull and an extensive postcranium, represents a new species of Alioramus, Alioramus altai. This specimen conclusively demonstrates that Alioramus is a small, gracile, long-snouted carnivore that deviates from other tyrannosaurids in its body plan and presumably its ecological habits. As such, it increases the range of morphological diversity in one of the most familiar extinct clades. Phylogenetic analysis places Alioramus deep within the megapredatory Tyrannosauridae, and within the tyrannosaurine subclade that also includes Tarbosaurus and Tyrannosaurus. Both pneumatization and ornamentation are extreme compared with other tyrannosaurids, and the skull contains eight discrete horns. The new specimen is histologically aged at nine years old but is smaller than other tyrannosaurids of similar age. Despite its divergent cranial form, Alioramus is characterized by a similar sequence of ontogenetic changes as the megapredatory Tyrannosaurus and Albertosaurus, indicating that ontogenetic change is conservative in tyrannosaurids.