Toro-Tapia, G.; Burbidge, H.; Biga, V.; Davis, J. R.; Das, R.

Cellular differentiation is characterised by transitions in cell-state through reinterpretation of extracellular signals. However, the mechanisms facilitating context-dependent signal interpretation remain poorly understood. Differentiating neurons remodel a molecularly distinct primary cilium as they switch from canonical to non-canonical Shh signalling. Here, using long-term live-tissue imaging, we demonstrate that the opposing Shh signalling modulators Smo and GPR161 simultaneously accumulate in the remodelled primary cilium. The correct balance of Smo and GPR161 leads to elevated ciliary cAMP levels, which suppresses Gli transcription factor activation and regulates actin dynamics to drive neuron polarisation. Notably, disrupting this balance through Smo hyperactivation or GPR161 depletion results in reduced ciliary cAMP, inappropriate activation of canonical Shh signalling, dysregulated actin dynamics and initiation of multiple unstable axon-like projections. Thus, this study identifies shifts in ciliary cAMP levels as a key regulator of cellular signal interpretation, and links primary cilium-mediated signal transduction to precise control of cytoskeletal organisation.