Bulbil formation in Agave tequilana was analysed with the objective of understanding this phenomenon at the molecular and cellular levels. Bulbils formed 14-45 d after induction and were associated with rearrangements in tissue structure and accelerated cell multiplication. Changes at the cellular level during bulbil development were documented by histological analysis. In addition, several cDNA libraries produced from different stages of bulbil development were generated and partially sequenced. Sequence analysis led to the identification of candidate genes potentially involved in the initiation and development of bulbils in Agave, including two putative class I KNOX genes. Real-time reverse transcription-PCR and in situ hybridization revealed that expression of the putative Agave KNOXI genes occurs at bulbil initiation and specifically in tissue where meristems will develop. Functional analysis of Agave KNOXI genes in Arabidopsis thaliana showed the characteristic lobed phenotype of KNOXI ectopic expression in leaves, although a slightly different phenotype was observed for each of the two Agave genes. An Arabidopsis KNOXI (knat1) mutant line (CS30) was successfully complemented with one of the Agave KNOX genes and partially complemented by the other. Analysis of the expression of the endogenous Arabidopsis genes KNAT1, KNAT6, and AS1 in the transformed lines ectopically expressing or complemented by the Agave KNOX genes again showed different regulatory patterns for each Agave gene. These results show that Agave KNOX genes are functionally similar to class I KNOX genes and suggest that spatial and temporal control of their expression is essential during bulbil formation in A. tequilana.