We present evidence that notochord and muscle differentiation are crucial for morphogenesis of the ascidian tail. We developed a novel approach for embryological manipulation of the developing larval tissues using a simple method to introduce DNA into Ciona intestinalis and the several available tissue-specific promoters. With such promoters, we misexpressed the Xenopus homeobox gene bix in notochord or muscle of Ciona embryos as a means of interfering with development of these tissues. Ciona embryos expressing bix in the notochord from the 64-cell stage develop into larvae with very short tails, in which the notochord precursors fail to intercalate and differentiate. Larvae with mosaic expression of bix have intermediate phenotypes, in which a partial notochord is formed by the precursor cells that did not receive the transgene while the precursors that express the transgene cluster together and fail to undergo any of the cell-shape changes associated with notochord differentiation. Muscle cells adjacent to differentiated notochord cells are properly patterned, while those next to the notochord precursor cells transformed by bix exhibit various patterning defects. In these embryos, the neural tube extends in the tail to form a nerve cord, while the endodermal strand fails to enter the tail region. Similarly, expression of bix in muscle progenitors impairs differentiation of muscle cells, and as a result, notochord cells fail to undergo normal extension movements. Hence, these larvae have a shorter tail, due to a block in the elongation of the notochord. Taken together, these observations suggest that tail formation in ascidian larvae requires not only signaling from notochord to muscle cells, but also a "retrograde" signal from muscle cells to notochord.