Asymmetric cell division is important for regulating cell proliferation and fate determination during stomatal development in plants. Although genes that control asymmetric division and cell differentiation in stomatal development have been reported, regulators controlling the process from asymmetric division to cell differentiation remain poorly understood. Here, we report a weak allele (fk–J3158) of the Arabidopsis sterol C–14 reductase gene FACKEL (FK) that shows clusters of small cells and stomata in leaf epidermis, a common phenomenon that is often seen in mutants defective in stomatal asymmetric division. Interestingly, the physical asymmetry of these divisions appeared to be intact in fk mutants, but the cell-fate asymmetry was greatly disturbed, suggesting that the FK pathway links these two crucial events in the process of asymmetric division. Sterol profile analysis revealed that the fk–J3158 mutation blocked downstream sterol production. Further investigation indicated that cyclopropylsterol isomerase1 (cpi1), sterol 14α–demethylase (cyp51A2) and hydra1 (hyd1) mutants, corresponding to enzymes in the same branch of the sterol biosynthetic pathway, displayed defective stomatal development phenotypes, similar to those observed for fk. Fenpropimorph, an inhibitor of the FK sterol C–14 reductase in Arabidopsis, also caused these abnormal small-cell and stomata phenotypes in wild-type leaves. Genetic experiments demonstrated that sterol biosynthesis is required for correct stomatal patterning, probably through an additional signaling pathway that has yet to be defined. Detailed analyses of time-lapse cell division patterns, stomatal precursor cell division markers and DNA ploidy suggest that sterols are required to properly restrict cell proliferation, asymmetric fate specification, cell-fate commitment and maintenance in the stomatal lineage cells. These events occur after physical asymmetric division of stomatal precursor cells.