Previously, we showed that deletion of the TGF-beta type II receptor (Tgfbr2) in Type II Collagen (Col2a) expressing cells results in defects in the development of the axial skeleton. Defects included a reduction in size and alterations in the shape of specific vertebral elements. Anterior lateral and dorsal elements of the vertebrae were missing or irregularly shaped. Vertebral bodies were only mildly affected, but the intervertebral disc (IVD) was reduced or missing. In this manuscript, we show that alterations in the initiation or proliferation of cartilage are not detected in the axial skeleton. However, the expression domain of Fibromodulin (Fmod), a marker of the IVD, was reduced and the area of the future IVD contained peanut agglutinin (PNA) staining cartilage. Next, we show that the expression domains of Pax1 and Pax9, which are preferentially expressed in the caudal sclerotome, are expanded over the entire rostral to caudal length of the sclerotome segment. Dorsal-ventral patterning was not affected in these mice as accessed by expression of Pax1, Pax9, and Msx1. Proliferation was modestly reduced in the loose cells of the sclerotome. The results suggest that signaling through Tgfbr2 regulates the maintenance of boundaries in the sclerotome and developing axial skeleton.