Chloroplast formation is associated with embryo development and seedling growth. However, the relationship between chloroplast differentiation and embryo development remains unclear. Five FtsHi genes that encode proteins with high similarity to FtsH proteins, but lack Zn2+-binding motifs, are present in the Arabidopsis genome. In this study, we showed that T-DNA insertion mutations in the Arabidopsis FtsHi4 gene resulted in embryo arrest at the globular-to-heart-shaped transition stage. Transmission electron microscopic analyses revealed abnormal plastid differentiation with a severe defect in thylakoid formation in the mutant embryos. Immunocytological studies demonstrated that FtsHi4 localized in chloroplasts as a thylakoid membrane-associated protein, supporting its essential role in thylakoid membrane formation. We further showed that FtsHi4 forms protein complexes, and that there was a significant reduction in the accumulation of D2 and PsbO (two photosystem II proteins) in mutant ovules. The role of FtsHi4 in chloroplast development was confirmed using an RNA-interfering approach. Additionally, mutations in other FtsHi genes including FtsHi1, FtsHi2, and FtsHi5 caused phenotypic abnormalities similar to ftshi4 with respect to plastid differentiation during embryogenesis. Taken together, our data suggest that FtsHi4, together with FtsHi1, FtsHi2, and FtsHi5 are essential for chloroplast development in Arabidopsis.