Like all coronaviruses, infectious bronchitis virus, the causative agent of infectious bronchitis in chickens, exhibits a high mutation rate. Adaptive mutations that arise during the production of live attenuated vaccines against IBV often decrease virulence. The specific impact of these mutations on viral pathogenicity, however, has not been fully elucidated. In this study, we identified a mutation at the 3’ end of the S gene in an IBV strain that was serially passaged in chicken embryos, and showed that this mutation resulted in a 9-aa truncation of the cytoplasmic tail (CT) of the S protein. This phenomenon of CT truncation has previously been observed in the production of attenuated vaccines against other coronaviruses such as the porcine epidemic diarrhea virus. We next discovered that the 9-aa truncation in the S protein CT resulted in the loss of the endoplasmic-reticulum-retention signal (KKSV). Rescue experiments with recombinant viruses confirmed that the deletion of the KKSV motif impaired the localization of the S protein to the endoplasmic-reticulum-Golgi intermediate compartment (ERGIC) and increased its expression on the cell surface. This significantly reduced the incorporation of the S protein into viral particles, impaired early subgenomic RNA and protein synthesis, and ultimately reduced viral invasion efficiency in CEK cells. In vivo experiments in chickens confirmed the reduced pathogenicity of the mutant IBV strains. Additionally, we showed that the adaptive mutation altered the TRS-B of ORF3 and impacted the transcriptional regulation of this gene. Our findings underscore the significance of this adaptive mutation in the attenuation of IBV infection and provide a novel strategy for the development of live attenuated IBV vaccines.