The zebrafish tailbud contains two independent populations of midline progenitor cells that maintain long-term germ layer plasticity and differentiate in response to local signaling cues.

Vertebrate body axis formation depends on a population of bipotential neuromesodermal cells along the posterior wall of the tailbud that make a germ layer decision after gastrulation to form spinal cord and mesoderm. Despite exhibiting germ layer plasticity, these cells never give rise to midline tissues of the notochord, floor plate and dorsal endoderm, raising the question of whether midline tissues also arise from basal posterior progenitors after gastrulation. We show in zebrafish that local posterior signals specify germ layer fate in two basal tailbud midline progenitor populations. Wnt signaling induces notochord within a population of notochord/floor plate bipotential cells through negative transcriptional regulation of sox2. Notch signaling, required for hypochord induction during gastrulation, continues to act in the tailbud to specify hypochord from a notochord/hypochord bipotential cell population. Our results lend strong support to a continuous allocation model of midline tissue formation in zebrafish, and provide an embryological basis for zebrafish and mouse bifurcated notochord phenotypes as well as the rare human congenital split notochord syndrome. We demonstrate developmental equivalency between the tailbud progenitor cell populations. Midline progenitors can be transfated from notochord to somite fate after gastrulation by ectopic expression of msgn1, a master regulator of paraxial mesoderm fate, or if transplanted into the bipotential progenitors that normally give rise to somites. Our results indicate that the entire non-epidermal posterior body is derived from discrete, basal tailbud cell populations. These cells remain receptive to extracellular cues after gastrulation and continue to make basic germ layer decisions.