Medullary bone (MB) is a sex-specific tissue produced by female birds during the laying cycle, and it is hypothesized to have arisen within Avemetatarsalia, possibly outside Avialae. Over the years, researchers have attempted to define a set of criteria from which to evaluate the nature of purported MB-like tissues recovered from fossil specimens. However, we argue that the prevalence, microstructural and chemical variability of MB in Neornithes is, as of yet, incompletely known and thus current diagnoses of MB do not capture the extent of variability that exists in modern birds. Based on recently published data and our own observations of MB distribution and structure using computed tomography and histochemistry, we attempt to advance the discourse on identifying MB in fossil specimens. We propose: (i) new insights into the phylogenetic breadth and structural diversity of MB within extant birds; (ii) a reevaluation and refinement of the most recently published list of criteria suggested for confidently identifying MB in the fossil record; (iii) reconsideration of some prior identifications of MB-like tissues in fossil specimens by taking into account the newly acquired data; and (iv) discussions on the challenges of characterizing MB in Neornithes with the goal of improving its diagnosis in extinct avemetatarsalians. This article is part of the theme issue 'Vertebrate palaeophysiology'.