Axis elongation of the vertebrate embryo involves the generation of cell lineages from posterior progenitor populations. We investigated the molecular mechanism governing axis elongation in vertebrates using the Araucana rumpless chicken. Araucana embryos exhibit a defect in axis elongation, failing to form the terminal somites and concomitant free caudal vertebrae, pygostyle, and associated tissues of the tail. Through whole genome sequencing of six Araucana we have identified a critical 130 kb region, containing two candidate causative SNPs. Both SNPs are proximal to the IRX1 and IRX2 genes, which are required for neural specification. We show that IRX1 and IRX2 are both misexpressed within the bipotential chordoneural hinge progenitor population of Araucana embryos. Expression analysis of BRA and TBX6, required for specification of mesoderm, shows that both are downregulated, whereas SOX2, required for neural patterning, is expressed in ectopic epithelial tissue. Finally, we show downregulation of genes required for the protection and maintenance of the tailbud progenitor population from the effects of retinoic acid. Our results support a model where the disruption in balance of mesoderm and neural fate results in early depletion of the progenitor population as excess neural tissue forms at the expense of mesoderm, leading to too few mesoderm cells to form the terminal somites. Together this cascade of events leads to axis truncation.