Morphogens are secreted signalling molecules that act in a graded manner to control the pattern of cellular differentiation in developing tissues. An example is Sonic hedgehog (Shh), which acts in several developing vertebrate tissues, including the central nervous system, to provide positional information during embryonic patterning. Here we address how Shh signalling assigns the positional identities of distinct neuronal subtype progenitors throughout the ventral neural tube. Assays of intracellular signal transduction and gene expression indicate that the duration as well as level of signalling is critical for morphogen interpretation. Progenitors of the ventral neuronal subtypes are established sequentially, with progressively more ventral identities requiring correspondingly higher levels and longer periods of Shh signalling. Moreover, cells remain sensitive to changes in Shh signalling for an extended time, reverting to antecedent identities if signalling levels fall below a threshold. Thus, the duration of signalling is important not only for the assignment but also for the refinement and maintenance of positional identity. Together the data suggest a dynamic model for ventral neural tube patterning in which positional information corresponds to the time integral of Shh signalling. This suggests an alternative to conventional models of morphogen action that rely solely on the level of signalling.