More than a quarter of the primary productivity on land, and a large fraction of the food that humans consume, is contributed by plants that fix atmospheric CO(2) by C(4) photosynthesis. It has been estimated that transferring the C(4) pathway to C(3) crops could boost yield by 50% and also increase water use efficiency and reduce the need for fertilizer, particularly in dry, hot environments. The high productivity of maize (Zea mays), sugarcane (Saccharum spp.) and several emerging bioenergy grasses is due largely to C(4) photosynthesis, which is enabled by the orderly arrangement, in concentric rings, of specialized bundle sheath and mesophyll cells in leaves in a pattern known as Kranz anatomy. Here we show that PIN, the auxin efflux protein, is present in the end walls of maize bundle sheath cells, as it is in the endodermis of the root. Since this marker suggests the expression of endodermal genetic programs in bundle sheath cells, we determined whether the transcription factor SCARECROW, which regulates structural differentiation of the root endodermis, also plays a role in the development of Kranz anatomy in maize. Mutations in the Scarecrow gene result in proliferation of bundle sheath cells, abnormal differentiation of bundle sheath chloroplasts, vein disorientation, loss of minor veins and reduction of vein density. Further characterization of this signal transduction pathway should facilitate the transfer of the C(4) trait into C(3) crop species, including rice.