Transcriptionally active chromosome (TAC) is a fraction of protein/DNA complexes with RNA polymerase activity in the plastid. However, the function of most TAC proteins remains unknown. Here, we isolated two allelic mutants of the gene for a TAC component, TAC7, and performed functional analysis in plastid gene expression and chloroplast development in Arabidopsis. tac7-1 is a mutant with a premature translation termination isolated from a population treated with ethyl methane sulfonate, and tac7-2 is a transfer-DNA tagging mutant. Both of them showed an albino phenotype when grown under normal light conditions, and a few appressed membranes were observed inside the defective chloroplasts. These data indicate that TAC7 is important for thylakoid biogenesis. The TAC7 gene encodes an uncharacterized 161 amino acids polypeptide localized in chloroplast. The transcriptional levels of plastid-encoded polymerase (PEP)-dependent genes were downregulated in tac7-2, suggesting that PEP activity was decreased in the mutant. Yeast two-hybrid assay shows that TAC7 can interact with the four TAC components including FLN1, TAC10, TAC12 and TAC14 which are involved in redox state changes, phosphorylation processes and phytochrome-dependent light signaling, respectively, These data indicate that TAC7 plays an important role for TAC to regulate PEP-dependent chloroplast gene expression and chloroplast development.