The growth of plants depends on continuous function of the meristems. Shoot meristems are responsible for all the post-embryonic aerial organs, such as leaves, stems and flowers. It has been assumed that the phytohormone cytokinin has a positive role in shoot meristem function. A severe reduction in the size of meristems in a mutant that is defective in all of its cytokinin receptors has provided compelling evidence that cytokinin is required for meristem activity. Here, we report a novel regulation of meristem activity, which is executed by the meristem-specific activation of cytokinins. The LONELY GUY (LOG) gene of rice is required to maintain meristem activity and its loss of function causes premature termination of the shoot meristem. LOG encodes a novel cytokinin-activating enzyme that works in the final step of bioactive cytokinin synthesis. Revising the long-held idea of multistep reactions, LOG directly converts inactive cytokinin nucleotides to the free-base forms, which are biologically active, by its cytokinin-specific phosphoribohydrolase activity. LOG messenger RNA is specifically localized in shoot meristem tips, indicating the activation of cytokinins in a specific developmental domain. We propose the fine-tuning of concentrations and the spatial distribution of bioactive cytokinins by a cytokinin-activating enzyme as a mechanism that regulates meristem activity.