For a long time, the genus Knebelia Van Straelen, 1922 has comprised two species of eryonid lobster, K. bilobata (Münster, 1839) and K. schuberti (Meyer, 1836), both recorded exclusively from Late Jurassic Lagerstätten in southern Germany. Recently, the latter has been suggested to represent a juvenile individual of Cycleryon propinquus (Schlotheim, 1822). A re-examination of the type and new material has led to our rejection of that interpretation and confirmation of assignment of this species to Knebelia. Two specimens, both possessing short frontal lobes, from plattenkalks at Nusplingen (late Kimmeridgian) and at Solnhofen (early Tithonian), respectively, are here assigned to a new species, K. totoroi sp. nov. This new species and a review of K. bilobata have furnished new insights into the origin and function of the frontal lobes, which are expansions articulated to the front of the carapace. They probably functioned as rudders facilitating ‘tail-flip swimming’ as observed in the paddle-like antennae of extant scyllarids (Eucrustacea, Decapoda, Scyllaridae). The rudder-like lobes identified in Knebelia may therefore represent a case of convergent evolution.