Continuous growth and development of plants is controlled by meristems that harbour stem cell pools. Division of stem cells and differentiation of their progeny are coordinated by intercellular signaling. In Arabidopsis, stem cells in shoot and floral meristems secrete CLAVATA3, a member of the CLE protein family that activates the CLV1/CLV2 receptor complex in underlying cells to restrict the size of the stem cell population. We found that CLE40 encodes a potentially secreted protein that is distantly related to CLV3. While CLV3 transcripts are confined to stem cells of the shoot system, CLE40 is expressed at low levels in all tissues, including roots. Misexpression and promoter swap experiments show that CLE40 can fully substitute for CLV3 to activate CLV signalling in the shoot, indicating that CLV3 and CLE40 are functionally equivalent proteins that differ mainly in their expression patterns. Analysis of cle40 mutants shows that wild-type expression levels of CLE40 are insufficient to contribute to CLV signalling. High level expression of CLV3 or CLE40 results in a premature loss of root meristem activity, indicating that activation of a CLV-like signaling pathway may restrict cell fate also in roots. The cellular organization of cle40 root meristems is normal, but mutant roots grow in a strongly waving pattern, suggesting a role for CLE40 in a signaling pathway that controls movement of the root tip.