Living cells must be able to switch between growth and differentiation with high fidelity and precise spatial control to ensure that normal tissue patterns are formed in the embryo and maintained throughout adult life. Most work on cell proliferation focuses on elucidating the signaling pathways responsible for control of cell cycle progression that are triggered by cell binding to soluble growth factors and insoluble extracellular matrix. Here we review recent work, which has revealed that mechanical tension-dependent changes in cell shape and cytoskeletal structure are equally critical for control of growth, as well as cell fate switching. This interplay between soluble, insoluble, and mechanical cues helps to explain how cell behaviors responsible for tissue formation are controlled in the physical context of living tissues.