Although the shoot apical meristem (SAM) is ultimately responsible for post-embryonic development in higher plants, lateral meristems also play an important role in determining the final morphology of the above-ground part. Axillary buds developing at the axils of leaves produce additional shoot systems, lateral branches. The rice TB1 gene (OsTB1) was first identified based on its sequence similarity with maize TEOSINTE BRANCHED 1 (TB1), which is involved in lateral branching in maize. Both genes encode putative transcription factors carrying a basic helix–loop–helix type of DNA-binding motif, named the TCP domain. The genetic locus of OsTB1 suggested that OsTB1 is a real counterpart of maize TB1. Transgenic rice plants overexpressing OsTB1 exhibited markedly reduced lateral branching without the propagation of axillary buds being affected. We also demonstrated that a rice strain carrying a classical morphological marker mutation, fine culm 1 (fc1), contain the loss-of-function mutation of OsTB1 and exhibits enhanced lateral branching. Expression of OsTB1, as examined with a putative promoter–glucuronidase (GUS) gene fusion, was observed throughout the axillary bud, as well as the basal part of the shoot apical meristem, vascular tissues in the pith and the lamina joint. Taking these data together, we concluded that OsTB1 functions as a negative regulator for lateral branching in rice, presumably through expression in axillary buds.