The two main tasks of a meristem, self-perpetuation and organ initiation, are separated spatially. Slowly dividing cells in the meristem center act as pluripotent stem cells, and only their derivatives in the meristem periphery specify new organs. Meristem integrity and cellular proliferation are controlled in part by regulatory interactions between genes that are expressed in specific subdomains of the meristem. Using transposon-mediated activation tagging, we have identified Dornröschen (drn-D) mutants of Arabidopsis that prematurely arrest shoot meristem activity with the formation of radialized lateral organs. The mutated gene (DRN/ESR1), which encodes an AP2/ERF protein, is expressed in a subdomain of meristem stem cells, in lateral organ anlagen, and transiently in the distal domain of organ primordia. During the development of drn-D mutants, expression of the homeobox gene SHOOTMERISTEMLESS is downregulated and later reactivated in an altered domain. In addition, we found increased expression of CLAVATA3 and WUSCHEL, two genes that antagonistically regulate stem cell fate in meristems. These findings suggest that the DRN/ESR1 gene product is involved in the regulation of gene expression patterns in meristems. Furthermore, specific misexpression of DRN in meristem stem cells affects organ polarity and outgrowth in the meristem periphery, indicating that DRN/ESR1 itself, or a process regulated by DRN/ESR1, can act non-cell-autonomously. We elaborate on the role of DRN/ESR1 in meristem and organ development and discuss its possible role in the process of shoot regeneration.