During plant radial growth typically seen in trees, procambial and cambial cells act as meristematic cells in the vascular system to self-proliferate and differentiate into xylem cells. These two processes are regulated by a signalling pathway composed of a peptide ligand and its receptor; tracheary element differentiation inhibitory factor (TDIF) and TDIF RECEPTOR (TDR). Here we show that glycogen synthase kinase 3 proteins (GSK3s) are crucial downstream components of the TDIF signalling pathway suppressing xylem differentiation from procambial cells. TDR interacts with GSK3s at the plasma membrane and activates GSK3s in a TDIF-dependent fashion. Consistently, a specific inhibitor of plant GSK3s strongly induces xylem cell differentiation through BRI1-EMS SUPPRESSOR 1 (BES1), a well-known target transcription factor of GSK3s. Our findings provide insight into the regulation of cell fate determination in meristem maintenance.