Development of the axial skeleton is a complex, stepwise process that relies on intricate signaling and coordinated cellular differentiation. Disruptions to this process can result in a myriad of skeletal malformations that range in severity. The notochord and the sclerotome are embryonic tissues that give rise to the major components of the intervertebral discs and the vertebral bodies of the spinal column. Through a number of mouse models and characterization of congenital abnormalities in human patients, various growth factors, transcription factors, and other signaling proteins have been demonstrated to have critical roles in the development of the axial skeleton. Balance between opposing growth factors as well as other environmental cues allows for cell fate specification and divergence of tissue types during development. Furthermore, characterization of progenitor cells for specific cell lineages has furthered the understanding of specific spatiotemporal cues that cells need in order to initiate and complete development of distinct tissues. Identifying specific marker genes that can distinguish between the various embryonic and mature cell types is also of importance. Clinically, understanding developmental clues can aid in the generation of therapeutics for musculoskeletal disease through the process of developmental engineering. Studies into potential stem cell therapies are based on knowledge of the normal processes that occur in the embryo, which can then be applied to stepwise tissue engineering strategies.