Rice architecture is an important agronomic trait that affects grain yield. We characterized a tillering dwarf mutant d88 derived from Oryza sativa ssp. japonica cultivar Lansheng treated with EMS. The mutant had excessive shorter tillers and smaller panicles and seeds compared to the wild-type. A reduction in number and size of parenchyma cells around stem marrow cavity as well as a delay in the elongation of parenchyma cells caused slender tillers and dwarfism in the d88 mutant. The D88 gene was isolated via map-based cloning and identified to encode a putative esterase. The gene was expressed in most rice organs, with especially high levels in the vascular tissues. The mutant carried a nucleotide substitution in the first exon of the gene that led to the substitution of arginine for glycine, which presumably disrupted the functionally conserved N-myristoylation domain of the protein. The function of the gene was confirmed by complementation test and antisense analysis. D88, thus, represents a new category of genes that regulates cell growth and organ development and consequently plant architecture. The potential relationship between the tiller formation associated genes and D88 is discussed and future identification of the substrate for D88 may lead to the characterization of new pathways regulating plant development.