Auxin is central to many aspects of plant development; accordingly, plants have evolved several mechanisms to regulate auxin levels, including de novo auxin biosynthesis, degradation, and conjugation to sugars and amino acids. Here, we report the characterization of an Arabidopsis thaliana mutant, IAA carboxyl methyltransferase1-dominant (iamt1-D), which displayed dramatic hyponastic leaf phenotypes caused by increased expression levels of the IAMT1 gene. IAMT1 encodes an indole-3-acetic acid (IAA) carboxyl methyltransferase that converts IAA to methyl-IAA ester (MeIAA) in vitro, suggesting that methylation of IAA plays an important role in regulating plant development and auxin homeostasis. Whereas both exogenous IAA and MeIAA inhibited primary root and hypocotyl elongation, MeIAA was much more potent than IAA in a hypocotyl elongation assay, indicating that IAA activities could be effectively regulated by methylation. IAMT1 was spatially and temporally regulated during the development of both rosette and cauline leaves. Changing expression patterns and/or levels of IAMT1 often led to dramatic leaf curvature phenotypes. In iamt1-D, the decreased expression levels of TCP genes, which are known to regulate leaf curvature, may partially account for the curly leaf phenotype. The identification of IAMT1 and the elucidation of its role in Arabidopsis leaf development have broad implications for auxin-regulated developmental process.