Peptide signaling plays important roles in various developmental processes of plants. Genes encoding CLE proteins, which are processed into CLE signaling peptides, are required for maintenance of the shoot apical meristem and for vascular differentiation. FON2-LIKE CLE PROTEIN1 (FCP1), a member of the CLE gene family, negatively regulates meristem maintenance in both shoot and root apical meristems of rice (Oryza sativa). Here, we examined the role of FCP1 in leaf development. We found that overexpression of FCP1 affects various aspects of leaf development in shoots regenerated from calli, making it difficult to distinguish between the leaf blade and leaf sheath. Differentiation of tissues such as vascular bundle and sclerenchyma was strongly inhibited by FCP1 overexpression. Spatial expression patterns of developmental genes DROOPING LEAF (DL) and OsPINHEAD1 (OsPNH1) were severely affected in the FCP1-overexpressing shoots. Whereas DL was expressed in the central region of leaf primordia in control shoots, DL expression was expanded throughout the leaf primordia of the FCP1-overexpressing shoots in early developmental stages. By contrast, OsPNH1, which is expressed in provascular and developing vascular tissues in normal seedlings, was strongly repressed by FCP1 overexpression. Taken together, our results suggest that FCP1 is involved in the regulation of cell fate determination during leaf development.