In angiosperms, root branching requires a continuous re-initiation of new root meristems. Through some unknown mechanism, in most eudicots pericycle cells positioned against the protoxylem change identity and initiate patterned division, leading to formation of lateral root primordia that further develop into lateral roots. This process is auxin-regulated. We have observed that three mutations in the Diageotropica (Dgt) gene in tomato prevent primordium formation. Detailed analysis of one of these mutants, dgt1-1, demonstrated that the mutation does not abolish the proliferative capacity of the xylem-adjacent pericycle in the differentiated root portion. Files of shortened pericycle cells found in dgt1-1 roots were unrelated to primordium formation. Auxin application stimulated this unusual proliferation, leading to formation of a multi-layered xylem-adjacent pericycle, but did not rescue the primordium formation. In contrast to wild type, auxin could not induce any cell divisions in the pericycle of the most distal dgt1-1 root-tip portion. In wild-type roots, the Dgt gene promoter was expressed strongly in lateral root primordia starting from their initiation, and on auxin treatment was induced in the primary root meristem. Auxin level and distribution were altered in dgt1-1 root tissues, as judged by direct auxin measurements, and the tissue-specific expression of an auxin-response reporter was altered in transgenic plants. Together, our data demonstrate that the Dgt gene product, a type-A cyclophilin, is essential for morphogenesis of lateral root primordia, and that the dgt mutations uncouple patterned cell division in lateral root initiation from proliferative cell division in the pericycle.