During vertebrate gastrulation, concurrent inductive events and cell movements fashion the body plan. Convergence and extension (C&E) gastrulation movements narrow the vertebrate embryonic body mediolaterally while elongating it rostrocaudally. Segmented somites are shaped and positioned by C&E alongside the notochord and differentiate into skeleton, fast, and slow muscles during somitogenesis. In zebrafish, simultaneous inactivation of non-canonical Wnt signaling components Knypek and Trilobite strongly impairs C&E gastrulation movements. Here we show that knypek;trilobite double mutants exhibit a severe deficit in slow muscles and their precursor, adaxial cells, revealing essential roles of C&E movements in adaxial cell development. Adaxial cells become distinguishable in the presomitic mesoderm during late gastrulation by their expression of myogenic factors and axial-adjacent position. Using cell tracing analyses and genetic manipulations, we demonstrate that C&E movements regulate the number of prospective adaxial cells specified during gastrulation by determining the size of the interface between the inductive axial and target presomitic tissues. During segmentation, when the range of Hedgehog signaling from the axial tissue declines, tight apposition of prospective adaxial cells to the notochord, which is achieved by convergence movements, is necessary for their continuous Hedgehog reception and fate maintenance. We provide direct evidence to show that the deficiency of adaxial cells in knypek;trilobite double mutants is due to impaired C&E movements, rather than an alteration in Hedgehog signal and its reception, or a cell-autonomous requirement for Knypek and Trilobite in adaxial cell development. Our results underscore the significance of precise coordination between cell movements and inductive tissue interactions during cell fate specification.