Sensory systems face a barrage of stimulation that continually changes along multiple dimensions. These simultaneous changes create a formidable problem for the nervous system, as neurons must dynamically encode each stimulus dimension, despite changes in other dimensions. Here, we measured how neurons in visual cortex encode orientation following changes in luminance and contrast, which are critical for visual processing, but nuisance variables in the context of orientation coding. Using information theoretic analysis and population decoding approaches, we find that orientation discriminability is luminance and contrast dependent, changing over time due to firing rate adaptation. We also show that orientation discrimination in human observers changes during adaptation, in a manner consistent with the neuronal data. Our results suggest that adaptation does not maintain information rates per se, but instead acts to keep sensory systems operating within the limited dynamic range afforded by spiking activity, despite a wide range of possible inputs.