Scientists discovered the 1-inch-long (2.5-centimeter-long) species—dubbed Hippotropiscis frenki—in a fossil-rich region called the Tunjice Hills, where the team also found the oldest known seahorse fossils in 2009.
Pygmy pipehorses are thought to be an evolutionary link between seahorses and their close relatives, including pipefish and seadragons.
The animals share so many features that at first study leader Jure Žalohar and colleagues thought the newfound fossils belonged to another type of ancient seahorse.
Modern pygmy pipehorses also look and behave a lot like seahorses—pygmy pipehorse males, for instance, care for their fertilized eggs in a special pouch.
"The only major difference is that [pygmy pipehorses] do not swim upright," Žalohar, a geologist at the University of Ljubljana, said by email.