Many animal species have ‘hidden’ colour patches that they display by choice. When exposed, these colour patches are generally highly conspicuous and may signal information to conspecific rivals, potential mates and/or predators. While they may evolve for a single function such as deterring a predator, they may later be co-opted for other functions such as signalling quality in a sexual selection context. Phrynocephalus mystaceus is a cryptic, arid-adapted agamid lizard that lives in sandy deserts in Asia. Both males and females have spectacular red head-flaps which can be exposed in an instant. We studied a population in the Tukai Desert of northern China and experimentally tested the hypothesis that the flaps serve a dual signalling function in the context of sexual and natural selection. Surprisingly, males did not use their flaps during either courtship or male contest competition. We present visual modelling of the colour signals as seen by a bird predator to explore how conspicuous the display is to a potential predator. The use of these flaps conformed to the predictions associated with deimatic displays and demonstrate a rare case of a deimatic display in a lizard. We also discuss the potential for deimatic displays in lizards more broadly.