Elongation of the body axis is a key aspect of body plan development. Bipotential neuromesoderm progenitors (NMPs) ensure axial growth of embryos by contributing both to the spinal cord and mesoderm. The current model for the mechanism controlling NMP deployment invokes Tbx6, a T-box factor, to drive mesoderm differentiation of NMPs. Here, we identify a new population of Tbx6 cells in a subdomain of the NMP niche in mouse embryos. Based on co-expression of a progenitor marker, Sox2, we identify this population as representing a transient cell state in the mesoderm-fated NMP lineage. Genetic lineage tracing confirms the presence of the NMP cell state. Furthermore, we report a novel aspect of the documented mutant phenotype, namely an increase from two to four ectopic neural tubes, corresponding to the switch in NMP niche, thus highlighting the importance of function in NMP fate decision. This study emphasizes the function of Tbx6 as a bistable switch that turns mesoderm fate ‘on’ and progenitor state ‘off’, and thus has implications for the molecular mechanism driving NMP fate choice.