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The squat lobster Munida rugosa has an unusual chela dimorphism exhibited mainly by large males. Some individuals have 'arched' chelae in which there is a gap between the dactylus and the pollex when closed, and others have a 'straight' morphology in which the dactylus and pollex oppose along most of their length. Geometric morphometric analysis indicated that, compared with males, the arched morphology does not develop fully in females, so further investigation was confined to males. In males, the distal part of the chela was similar in both the forms and seemed to be adapted to hold and shred prey items. Both morphologies had a major cylindrical tooth on the inner proximal part of the dactylus, but the arched morphology had a higher and wider propodus, a greater major tooth-pollex distance and a greater force generation than the straight morphology. The findings suggest that the arched chela morphology in M. rugosa is a sexually selected trait adapted to inflict puncture wounds on opponents during agonistic interactions. The arched morphology, therefore, appears to have evolved in males by means of sexual selection because it enhanced the function of the chela as a weapon, while retaining functionality for feeding.