Auxin has a fundamental role throughout the life cycle of land plants. Previous studies showed that the tomato cyclophilin DIAGEOTROPICA (DGT) promotes auxin response, but its specific role in auxin signaling remains unknown. We sequenced candidate genes in auxin-insensitive mutants of Physcomitrella patens and identified mutations in highly conserved regions of the moss ortholog of tomato DGT. As P. patens and tomato diverged from a common ancestor more than 500 million years ago, this result suggests a conserved and central role for DGT in auxin signaling in land plants. In this study we characterize the P. patens dgt (Ppdgt) mutants and show that their response to auxin is altered, affecting the chloronema-to-caulonema transition and the development of rhizoids. To gain an understanding of PpDGT function we tested its interactions with the TIR1/AFB-dependent auxin signaling pathway. We did not observe a clear effect of the Ppdgt mutation on the degradation of Aux/IAA proteins. However, the induction of several auxin-regulated genes was reduced. Genetic analysis revealed that dgt can suppress the phenotype conferred by overexpression of an AFB auxin receptor. Our results indicate that the DGT protein affects auxin-induced transcription and has a conserved function in auxin regulation in land plants.