The endogenous mechanism that determines vertebrate body length is unknown but must involve loss of chordo-neural-hinge (CNH)/axial stem cells and mesoderm progenitors in the tailbud. In early embryos, Fibroblast growth factor (FGF) maintains a cell pool that progressively generates the body and differentiation onset is driven by retinoid repression of FGF signalling. This raises the possibility that FGF maintains key tailbud cell populations and that rising retinoid activity underlies cessation of body axis elongation. Here we show that sudden loss of the mesodermal gene (Brachyury) from CNH and the mesoderm progenitor domain correlates with FGF signalling decline in the late chick tailbud. This is accompanied by expansion of neural gene expression and a similar change in cell fate markers is apparent in the human tailbud. Fate mapping of chick tailbud further revealed that spread of neural gene expression results from continued ingression of CNH-derived cells into the position of the mesoderm progenitor domain. Using gain and loss of function approaches in vitro and in vivo, we then show that attenuation of FGF/Erk signalling mediates this loss of Brachyury upstream of Wnt signalling, while high-level FGF maintains Brachyury and can induce ectopic CNH-like cell foci. We further demonstrate a rise in endogenous retinoid signalling in the tailbud and show that here FGF no longer opposes retinoid synthesis and activity. Furthermore, reduction of retinoid signalling at late stages elevated FGF activity and ectopically maintained mesodermal gene expression, implicating endogenous retinoid signalling in loss of mesoderm identity. Finally, axis termination is concluded by local cell death, which is reduced by blocking retinoid signalling, but involves an FGFR-independent mechanism. We propose that cessation of body elongation involves loss of FGF-dependent mesoderm identity in late stage tailbud and provide evidence that rising endogenous retinoid activity mediates this step and ultimately promotes cell death in chick tailbud.