Grass flowers are highly derived compared to their eudicot counterparts. To delineate OsMADS1 functions in rice floret organ development we have examined its evolution and the consequences of its knockdown or overexpression. Molecular phylogeny suggests the co-evolution of OsMADS1 with grass family diversification. OsMADS1 knockdown perturbs the differentiation of specific cell types in the lemma and palea, creating glume-like features, with severe derangements in lemma differentiation. Conversely, ectopic OsMADS1 expression suffices to direct lemma-like differentiation in the glume. Strikingly, in many OsMADS1 knockdown florets glume-like organs occupy all the inner whorls. Such effects in the second and third whorl are unexplained, as wild-type florets do not express OsMADS1 in these primordia and because transcripts for rice B and C organ-identity genes are unaffected by OsMADS1 knockdown. Through a screen for OsMADS1 targets we identify a flower-specific Nt-gh3 type gene, OsMGH3, as a downstream gene. The delayed transcription activation of OsMGH3 by dexamethasone-inducible OsMADS1 suggests indirect activation. The OsMGH3 floret expression profile suggests a novel role for OsMADS1 as an early-acting regulator of second and third whorl organ fate. We thus demonstrate the differential contribution of OsMADS1 for lemma versus palea development and provide evidence for its regulatory function in patterning inner whorl organs.