In higher plants, plastid development must be tightly coordinated with cell and organ development. In this paper, a novel T-DNA-mutagenized Arabidopsis line showing chlorotic leaves and minute stature was identified in a genetic screen for altered chloroplast development. The mutation corresponded to a single locus on chromosome IV and was associated with insertion of the T-DNA. This locus was named FARFADET and resulted in pleiotropic effects on chloroplast biogenesis, cell size and differentiation, organ size and number. Thus, in contrast with previously described chlorotic mutants, frd mutants were affected not only in chloroplast development and chlorophyll accumulation, but also in cell and organ development. Alteration of differentiation affected different cell types such as leaf epidermal cells, trichomes, mesophyll cells, and columella cells. A major effect on mesophyll cell differentiation was the lack of palisadic parenchyma and absence of grana stacks. Moreover, meristem size and lateral meristem initiation were affected. Genetic and molecular characterisation showed that the T-DNA insertion generated 41 bp deletion in a potential miRNA precursor. The predicted miRNA target genes were involved in plant development and stress. It is therefore hypothesized that the frd mutation had affected coordination of cell developmental span and the control of the division-differentiation balance.