Chang, C.;Renaud, J.;Tkacik, G.;Tsai, T.

How cells sense position to adopt appropriate fates is a central problem in development. In a classic paradigm, cells read morphogen gradients encoding positional information (PI), with prolonged signal integration improving fate precision. However, how cells adapt this strategy in morphogenetic tissues remains unclear. Here, we reconstructed complete positional and signalling histories for individual cells during zebrafish neurulation, where the Sonic hedgehog (Shh) gradient patterns ventral progenitors as the neural plate folds into a tube. Despite steadily increasing Shh activity, Shh-encoded PI peaked early and then declined. Morphogenesis set this early readout window and imposed a ∼1.2-bit ceiling on Shh-encoded information about final position and fate. Fate mapping, transcriptomic analyses, and timed Shh inhibition showed that fate specification is temporally and functionally aligned with this early readout window. Thus, when morphogenesis decouples signal quality from signal strength, cells specify fate when signalling is most informative, not when signalling is strongest.