The tail bud of amniote embryos comprises a mass of apparently undifferentiated mesenchymal cells located at the caudal limit of the embryo, representing the remains of Hensen's node and the primitive streak. These cells have the potential to give rise to a variety of different tissues including the posterior or 'secondary' neural tube, the tail gut, and somites and their derivatives. This seemingly homogeneous accumulation of cells therefore has the capacity to differentiate into tissues which in more cranial regions of the embryo are derived from cells of different germ layers. In this review, the tissue contributions of the tail bud in various vertebrate classes are discussed, with particular attention to the mesenchymal-to-epithelial transformation that characterizes the process of secondary neurulation, and which distinguishes it from the epithelial folding that occurs during primary neurulation in more cranial regions. Recent studies suggest that the transformation is accompanied by extensive changes in the cell surface oligosaccharide complement of the differentiating cells, and that the sialyted form of N-CAM is expressed both temporally and spatially in a manner that suggests a role for it in the process. The pluripotential nature of the tail bud mesenchyme may be revealed experimentally by grafting the tissue ectopically, or by culturing it on different substrata. In the latter case, the mesenchyme can be demonstrated to give rise to myocytes, chondrocytes, neuroepithelium and neural crest derivatives such as melanocytes, depending on the nature of the culture substratum. It is concluded that the tail bud mesenchyme represents a developing system which is readily amenable to experimentation and should provide insights into the general mechanisms of cell differentiation and transformation.