For a better understanding of shoot branching in rice (Oryza sativa), a rice activation-tagging library was screened for mutations in tiller development. Here, an activation-tagging mutant Ostil1 (Oryza sativa tillering1) was characterized, which showed increased tillers, enlarged tiller angle and semidwarf phenotype. Flanking sequence was obtained by plasmid rescue. RNA-interfering and overexpression transgenic rice plants were produced using Agrobacterium-mediated transformation. The mutant phenotype was cosegregated with the reallocation of Ds element, and the flanking region of the reallocated Ds element was identified as part of the OsNAC2 gene. Northern analysis showed that expression of OsNAC2 was greatly induced in the mutant plants. Transgenic rice overexpressing the OsNAC2 resulted in recapture of the mutant phenotype, while downregulation of OsNAC2 in the Ostil1 mutant through RNA interfering (RNAi) complemented the mutant phenotype, confirming that the Ostil1 was caused by overexpression of OsNAC2. Overexpression of OsNAC2 regulates shoot branching in rice. Overexpression of OsNAC2 contributes tiller bud outgrowth, but does not affect tiller bud initiation. This suggests that OsNAC2 has potential utility for improving plant structure for higher light-use efficiency and higher yield potential in rice.