BACKGROUND: In the zebrafish embryo, the differentiation of distinct muscle fiber types has been shown to require the activity of members of the Hedgehog (Hh) family of secreted proteins. Evidence from other systems suggests that Hh behaves as a morphogen, inducing cell fates in a concentration-dependent manner. Exactly how Hh signaling contributes to the generation of the correct pattern of cells within the zebrafish myotome, however, has remained obscure.RESULTS: Here, we distinguish four distinct myotomal cell identities in the zebrafish embryo on the basis of their position, morphology, and gene expression patterns. Using morpholino oligonucleotides (MOs) to diminish the activities of the Hh pathway components Patched (Ptc), Fused (Fu), and Suppressor of Fused (Su(fu)), and the teratogen cyclopamine to inhibit the Hh transducer Smoothened (Smo), we show that the appropriate differentiation of each cell type depends upon the levels and range of Hh signaling within the myotome. In addition, by transiently modulating Hh activity by using cyclopamine and a heat-inducible transgene, we demonstrate that the competence of myotomal cells to respond to Hh changes with time. Finally, we show that the Gli1 and Gli2 transcription factors mediate most of the response of myotomal cells to Hh.CONCLUSIONS: Hh signaling acts in a dosage-dependent manner to specify cell fate in the zebrafish myotome. Allocation of the correct number of cells to a specific fate depends upon the range of Hh activity. The timing of exposure to Hh determines the response of cells to the signal.