LATERALORGAN BOUNDARIES DOMAIN (LBD) genes, a novel plant-specific family, play specific roles in plant development. Although function of ASYMMETRIC LEAVES2 (AS2), a LBD gene, was extensively studied in Arabidopsis of dicots, little is known on the role of its ortholog in rice of monocots. In this study, a LBD gene that shares higher homology with Arabidopsis AS2 gene was identified in rice and it was designated as OsAS2. Its transcripts were detected throughout predicted leaf primordia in shoot apical meristem (SAM), leaf primordia, and young leaves. Overexpression of the OsAS2 gene inhibited shoot differentiation, promoted cell division, and delayed cell differentiation in rice calli. Transgenic plants with OsAS2 gene showed the aberrant twisted leaves, which lack auricle, and leaf structure was abnormal. Furthermore, a few genes involved in shoot meristem development were upregulated in transgenic plants. Our results suggest that proper expression of the OsAS2 gene is required for shoot differentiation and leaf development in rice.