Generally ‘shade tolerance’ refers to the capacity of a plant to exist at low light levels but characteristics of shade can vary and must be taken into account in defining the term. We studied Abies amabilis Dougl. ex J.Forbes and Tsuga heterophylla (Raf.) Sarg. under a forest canopy in the northwest of the Olympic Peninsula, USA, which has low annual sunshine hours and frequent overcast days. Using BF3 sunshine sensors, we surveyed diffuse and total light received by saplings growing under a range of canopy openness up to 30%. We measured variation in photosynthetic capacity over the growing season and within days and estimated photosynthesis induction in relation to ambient light. Three components of shade tolerance are associated with variation in light climate: (i) Total light on the floor of an 88-year stand of naturally regenerated T. heterophylla was greater on overcast than clear days. Light on overcast days varied throughout the day sometimes with a cyclical pattern. (ii) Photosynthetic capacity, Amax, varied both through the growing season and within days. Amax was generally greater in the latter part of the growing season, being limited by temperature and stomatal conductance, gs, at times during the early part. Saplings in more shaded areas had lower Amax and in the latter part of the growing season Amax was found to decline from mid-afternoon. (iii) Two patterns of photosynthesis induction to increased light were found. In a mean ambient light of 139 μmol m−2 s−1, induction had a curvilinear response to a step increase in light with a mean time constant, τ, of 112.3 s. In a mean ambient light of 74 μmol m−2 s−1, induction had a two-part increase: one with τ1 of 11.3 s and the other with τ2 of 184.0 s. These are the smallest published values of τ to date. (iv) Both variation in photosynthetic capacity and induction are components of shade tolerance where light varies over time. Amax acclimates to seasonal and diurnal changes in light and varies between microenvironments. The rapid induction processes can cause a rapid response of photosynthesis to changes in diffuse or direct light.