A novel dominant mutant designated 'dwarf in light 1' (dfl1-D) was isolated from screening around 1200 Arabidopsis activation-tagged lines. dfl1-D has a shorter hypocotyl under blue, red and far-red light, but not in darkness. Inhibition of cell elongation in shoots caused an exaggerated dwarf phenotype in the adult plant. The lateral root growth of dfl1-D was inhibited without any reduction of primary root length. The genomic DNA adjacent to the right border of T-DNA was cloned by plasmid rescue. The rescued genomic DNA contained a gene encoding a GH3 homologue. The transcript was highly accumulated in the dfl1-D. The dfl1-D phenotype was confirmed by over-expression of the gene in the wild-type plant. The dfl1-D showed resistance to exogenous auxin treatment. Moreover, over-expression of antisense DFL1 resulted in larger shoots and an increase in the number of lateral roots. These results indicate that the gene product of DFL1 is involved in auxin signal transduction, and inhibits shoot and hypocotyl cell elongation and lateral root cell differentiation in light.