Morphogens are long-range signaling molecules that pattern developing tissues in a concentration-dependent manner. The graded activity of morphogens within tissues exposes cells to different signal levels and leads to region-specific transcriptional responses and cell fates. In its simplest incarnation, a morphogen signal forms a gradient by diffusion from a local source and clearance in surrounding tissues. Responding cells often transduce morphogen levels in a linear fashion, which results in the graded activation of transcriptional effectors. The concentration-dependent expression of morphogen target genes is achieved by their different binding affinities for transcriptional effectors as well as inputs from other transcriptional regulators. Morphogen distribution and interpretation are the result of complex interactions between the morphogen and responding tissues. The response to a morphogen is dependent not simply on morphogen concentration but also on the duration of morphogen exposure and the state of the target cells. In this review, we describe the morphogen concept and discuss the mechanisms that underlie the generation, modulation, and interpretation of morphogen gradients.