MicroRNAs (miRNAs) are comprised of approximately 21 nucleotide (nt) RNAs that play important regulatory roles in growth and development by targeting mRNAs for cleavage or translational repression. In Arabidopsis, more than one hundred miRNAs have been identified but the biological functions of only a limited number of them have been determined by molecular genetic analysis. miR396 is a miRNA conserved among the dicot and monocot plants. In Arabidopsis, miR396 has two loci (MIR396a and MIR396b) and targets six Growth-Regulating Factor (GRF) genes encoding putative transcription factors with roles in plant leaf growth. Using a northern blot hybridizations approach, we have found that MIR396 is predominantly expressed in leaf and seedling. To further analyze the role of miR396 in the regulation of target genes and leaf growth, we have generated transgenic Arabidopsis plants that constitutively overexpress MIR396a or MIR396b. These transgenic plants have narrow-leaf phenotypes due to reduction in cell number. Ectopic overexpression of MIR396 represses expression of not only six GRF genes but also GIF1 encoding a GRF-interacting transcription coactivator with a role in cell proliferation in leaf. In addition, transgenic MIR396-overexpressing plants have lower densities of stomata and are more tolerant to drought than wild-type plants. These results strongly support the belief that miR396 plays an important role in plant leaf growth and development, most likely by repressing GRF gene expression.