In response to different stimuli many transcription factors (TFs) display different activation dynamics that trigger the expression of specific sets of target genes, suggesting that promoters have a way to decode them. Combining optogenetics, deep learning-based image analysis and mathematical modeling, we find that decoding of TF dynamics occurs only when the coupling between TF binding and transcription pre-initiation complex formation is inefficient and that the ability of a promoter to decode TF dynamics gets amplified by inefficient translation initiation. Furthermore, we propose a theoretical mechanism based on phase separation that would allow a promoter to be activated better by pulsatile than sustained TF signals. These results provide an understanding on how TF dynamics are decoded in mammalian cells, which is important to develop optimal strategies to counteract disease conditions, and suggest ways to achieve multiplexing in synthetic pathways.