The spinal cord in vertebrates is generated from the stem zone, a poorly characterized population of epiblast cells at the caudal end of the developing neural plate. On p. 4273, Delfino-Machín et al. describe this important cell population and the signalling pathways that specify it. They report that many cells in the chick stem zone express both early neural and mesodermal genes,but that this ambivalent cell fate is not a prerequisite for stem zone-specific gene expression. They show that FGF signalling is required but not sufficient for stem zone specification - signals from the paraxial mesoderm are also required. FGF signalling is also necessary for the onset of caudal Hox gene expression, but neither process requires retinoid signalling. Thus, spinal cord generation in chick seems to involve two stages:FGF-dependent establishment of the stem zone, followed by retinoid-dependent assignment of spinal cord identity.