Migmacastor procumbodens, gen. et sp. nov. is described from the late Arikareean of Nebraska based on a nearly complete skull. The new taxon exhibits various incisal specializations (e.g., incisors elongated along longitudinal axis, procumbent upper incisors) that are associated with tooth-digging behavior in modern rodents. Migmacastor does not belong in the Palaeocastorinae, the previously recognized fossorial clade of beavers, nor in any other castorid subfamily. Phylogenetic analysis indicates it is more derived than Agnotocastorinae and is a sister taxon to a monophyletic clade of beavers composed of both fossorial and semiaquatic taxa (Castorinae Palaeocastorinae Castoroidinae). Migmacastor is united to the latter unnamed clade by five unambiguous characters: lack of P3; upper tooth rows that diverge posteriorly; P4 larger than molars; smooth enamel on cheek teeth; and longitudinally grooved palate. Preliminary phylogenetic and morphological evidence suggest that tooth-digging behavior arose at least twice in North American beavers.