Based on their anatomical features, scientists have long hypothesized that cetaceans (whales, dolphins, and porpoises) evolved from land-dwelling mammals. Like their land-based relatives, cetaceans are warm-blooded animals that breathe air, give live birth, feed their young with milk, and move by flexing their spines up and down. These distinctly mammalian traits are known to have evolved in land-dwelling mammals long before the earliest cetaceans first took to the water.
Despite the obvious connections, scientists were puzzled for most of the 20th century by a lack of intermediate fossils illustrating the transition of cetaceans from land to water. Then, beginning in the early 1990s, several amazing transitional forms were discovered that fit neatly into the existing gaps.
Indohyus was comparable in shape, size, and behavior to its modern analog, the water chevrotain:
Indohyus was clearly not a cetacean, but it may have been a close cousin to the ancestors of cetaceans. Indeed, as shown by the illustration below, there is very little resemblance between Indohyus and modern cetaceans.
Indohyus restoration by Carl Buell
The primary characteristics linking Indohyus to cetaceans are similarities found in the middle-ear region of the skull:
From the original article in Nature
Other paleontological evidence has suggested that the animal spent considerable time in the water:
From the NEOUCOM press release
After further analysis, the discovery of Indohyus may add one more piece of evidence to the puzzle that illustrates the connection between cetaceans and their land-based ancestors.
What is most intriguing about this piece of the puzzle is that it fits with the molecular evidence that has already identified hippos (members of a group known as "artiodactyls") as the closest living relatives of cetaceans. The existence of an artiodactyl group in the fossil record that is a sister group to cetaceans would confirm the evolutionary hypothesis that whales, dolphins and porpoises are derived from ancient artiodactyl ancestors.
Even with this latest find, there are still many unanswered questions about the evolutionary history of cetaceans. The puzzle will always be missing pieces, but each new discovery has consistently confirmed the hypothesis that cetaceans evolved from land-dwelling mammals.
Indeed, it may no longer be appropriate to refer to the evolutionary origin of cetaceans as a "hypothesis." The evidence collected so far certainly leaves little room for alternative explanations.
For more about the discovery of Indohyus, see this streaming video from Nature.