Chloroplast development, maintenance and function depend on the coordinated expression of chloroplast and nuclear genes. The retrograde chloroplast signals are essential in coordinating nuclear gene expression. Although the sources of signals in chloroplasts have been identified and the associated transcription factors in the nucleus extensively studied, the molecular mechanism that relays chloroplast signals to the nucleus remains a mystery. Here we show that PTM, a chloroplast envelope-bound plant homeodomain (PHD) transcription factor with transmembrane domains, functions in multiple retrograde signal pathways. The proteolytic cleavage of PTM occurs in response to retrograde signals and amino-terminal PTM accumulates in the nucleus, where it activates ABI4 transcription in a PHD-dependent manner associated with histone modifications. These results provide a molecular basis for the critical function of PTM in retrograde chloroplast signaling and shed new light on the mechanism whereby chloroplast signals are transmitted to the nucleus through the cytosol.