Sharp cell type boundaries emerge from coordinated morphogen signaling.

Classic models of the French flag problem depict sharp cell-type boundaries emerging from threshold responses to morphogen gradients. How discrete cell-type boundaries arise from morphogen signals that vary continuously across developing tissues is not completely understood. We use hair follicle dermal condensate formation to study a sharp developmental transition in which proliferative progenitors undergo cell-cycle exit concurrent with molecular differentiation. Using genetic and genomic approaches, we show that Wnt and Hedgehog signaling interact to coordinate the timing of these two processes. We identify a division of labor between the pathways: Wnt signaling promotes cell-cycle exit by regulating chromatin binding of the Hedgehog mediator GLI3, while Hedgehog signaling induces differentiation genes in a Wnt-dependent manner and simultaneously elevates Wnt activity. When Wnt and Hedgehog activities are temporally aligned, differentiation and cell-cycle exit occur within the same developmental window, restricting both the duration and abundance of intermediate states and producing a sharp cell-type boundary. When these signals are misaligned, intermediate states persist and expand, producing fuzzy boundaries. These findings reveal a mechanism in which interacting morphogen signals regulate the duration and abundance of intermediate states during a developmental transition, thereby controlling how continuous cell-state progression is translated into discrete tissue patterning.