Reconstructions of bipedal locomotion in extinct theropods have been based primarily on information from crocodilians and birds, their closest living relatives. Much of the conflict between opposing hypotheses of bipedalism appears to be due to different phylogenies and categories of locomotor analysis. I present a new hypothesis of theropod locomotor evolution based on a methodology combining functional and morphological data. I propose that not all theropod limbs operated the same way; there was a shift from the primitive saurian limb retraction mechanism to a novel “avian” mechanism during theropod evolution. An integral aspect of this transition was modification of the tail. In basal theropods the tail was a substantial part of the body serving as a base for the caudofemoral musculature. More derived theropods evolved a reduced tail that became decoupled from its primitive linkage to the hindlimb. In birds the tail serves an entirely different function as a highly specialized structure for controlling the tail feathers during flight. The terrestrial locomotion of birds-flying, shorttailed theropods-is similar to, but distinctly different from, walking and running in basal members of the Theropoda.