The avian transition from long to short, distally fused tails during the Mesozoic ushered in the Pygostylian group, which includes modern birds. The avian tail embodies a bipartite anatomy, with the proximal separate caudal vertebrae region, and the distal pygostyle, formed by vertebral fusion. This study investigates developmental features of the two tail domains in different bird groups, and analyzes them in reference to evolutionary origins. We first defined the early developmental boundary between the two tail halves in the chicken, then followed major developmental structures from early embryo to post-hatching stages. Differences between regions were observed in sclerotome anterior/posterior polarity and peripheral nervous system development, and these were consistent in other neognathous birds. However, in the paleognathous emu, the neognathous pattern was not observed, such that spinal nerve development extends through the pygostyle region. Disparities between the neognaths and paleognaths studied were also reflected in the morphology of their pygostyles. The ancestral long-tailed spinal nerve configuration was hypothesized from brown anole and alligator, which unexpectedly more resembles the neognathous birds. This study shows that tail anatomy is not universal in avians, and suggests several possible scenarios regarding bird evolution, including an independent paleognathous long-tailed ancestor.