Plant lateral organs are initiated as small protrusions on the flanks of shoot apical meristems. Organ primordia are separated from the remainder of the meristem by distinct cell types that create a morphological boundary. The Arabidopsis thaliana gain-of-function mutant jagged lateral organs-D (jlo-D) develops strongly lobed leaves, indicative of KNOX gene misexpression, and the shoot apical meristem arrests organ initiation prematurely, terminating in a pin-like structure. The JLO gene, a member of the LATERAL ORGAN BOUNDARY DOMAIN gene family, is expressed in boundaries between meristems and organ primordia and during embryogenesis. Inducible JLO misexpression activates expression of the KNOX genes SHOOT MERISTEMLESS and KNAT1 in leaves and downregulates the expression of PIN auxin export facilitators. Consequently, bulk auxin transport through the inflorescence stem is drastically reduced. During embryogenesis, JLO is required for the initiation of cotyledons and development beyond the globular stage. Converting JLO into a transcriptional repressor causes organ fusions, showing that during postembryonic development, JLO function is required to maintain the integrity of boundaries between cell groups with indeterminate or determinate fates.