The tailbud, located at the posterior end of the embryo, plays a crucial role in embryonic development and posterior growth. This process is regulated by Dorsal Midline Neuromesodermal Progenitor cells (DM-NMPs), which contribute to the formation of the floorplate (neural tissue) and notochord (axial mesodermal tissues). The fate decisions within the DM-NMP population are carefully controlled. Our research utilizes the cyclin-dependent kinase DHB cell cycle sensor to reveal the cell cycle state of DM-NMPs as they transition into the notochord or remain in the floor plate. Additionally, using the Auxin Inducible Degron 2 we have shown this cell fate decision is also regulated by Canonical Wnt signaling activity to Sox2 transcription factor expression ratio. We have documented a population of NMPs in the dorsal posterior regions of the floorplate that has this bipotential capability. We have developed a model for the DM-NMP fate decision. In this model, floor plate cells migrate posteriorly along the iii notochord. Cells at the trailing edge encounter higher Sox2 transcription factor levels relative to canonical Wnt signaling, prompting them to exit the progenitor pool and maintain their floor plate identity. Conversely, cells at the most posterior region experience elevated canonical Wnt signaling activity relative to Sox2 levels, leading to their differentiation into notochord cells.. We observe that DM-NMPs in the posterior floor plate are cycling, whereas cells entering the notochord are arrested, highlighting the potential role of the cell cycle in notochord formation. Additionally, cells joining the notochord have a significantly higher canonical Wnt signaling activity to Sox2 ratio than DM-NMPs in the floor plate. This suggests that the interplay between canonical Wnt signaling and Sox2 expression, along with cell cycle regulation, plays a crucial role in determining cell fate and notochord formation.