Asymmetric cell divisions play an important role in the establishment and propagation of the cellular pattern of plant tissues. The SHORT-ROOT (SHR) gene is required for the asymmetric cell division responsible for formation of ground tissue (endodermis and cortex) as well as specification of endodermis in the Arabidopsis root. We show that SHR encodes a putative transcription factor with homology to SCARECROW (SCR). From analyses of gene expression and cell identity in genetically stable and unstable alleles of shr, we conclude that SHR functions upstream of SCR and participates in a radial signaling pathway. Consistent with a regulatory role in radial patterning, ectopic expression of SHR results in supernumerary cell divisions and abnormal cell specification in the root meristem.