This paper investigates the fundamental limits of integrated sensing and communication (ISAC) systems with 1-bit receiver quantization. We analyze a Gaussian fading ISAC channel with separate communication and monostatic sensing links, where both communication and sensing receivers are equipped with 1-bit quantizers. When the communication channel state information (CSI) is available at the receiver, we characterize the communication-sensing capacity region of 1-bit ISAC channel and show that no trade-off exists between communication and sensing performance. In particular, both communication and sensing capacities can be simultaneously achieved by a constant-amplitude input distribution with a specific rotational symmetry. For the scenario where communication CSI is also available at the transmitter, we formulate a weighted optimization problem that balances communication and sensing rates in 1-bit ISAC channel under an average power constraint and then derive the corresponding optimal power control policy. The results demonstrate how the optimal power control policy evolves with the weighting parameter, transitioning from a communication-centric water-filling structure to a more uniform allocation as sensing becomes increasingly prioritized.

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