Multipotent stem cell populations, the meristems, are fundamental for the indeterminate growth of plant bodies. One of these meristems, the cambium, is responsible for extended root and stem thickening. Strikingly, although the pivotal role of the plant hormone auxin in promoting cambium activity has been known for decades, the molecular basis of auxin responsiveness on the level of cambium cells has so far been elusive. Here, we reveal that auxin-dependent cambium stimulation requires the homeobox transcription factor WOX4. In Arabidopsis thaliana inflorescence stems, 1-N-naphthylphthalamic acid-induced auxin accumulation stimulates cambium activity in the wild type but not in wox4 mutants, although basal cambium activity is not abolished. This conclusion is confirmed by the analysis of cellular markers and genome-wide transcriptional profiling, which revealed only a small overlap between WOX4-dependent and cambium-specific genes. Furthermore, the receptor-like kinase PXY is required for a stable auxin-dependent increase in WOX4 mRNA abundance and the stimulation of cambium activity, suggesting a concerted role of PXY and WOX4 in auxin-dependent cambium stimulation. Thus, in spite of large anatomical differences, our findings uncover parallels between the regulation of lateral and apical plant meristems by demonstrating the requirement for a WOX family member for auxin-dependent regulation of lateral plant growth.