Substantial increases in grain yield of cereal crops are required to feed a growing human population. Here we show that a natural variant of SEMIDWARF AND HIGH-TILLERING (SDT) increases harvest index and grain productivity in rice. Gain-of-function sdt mutation has a shortened polyadenylation tail on the OsmiR156h microRNA precursor, which cause the up-regulation of OsmiR156h. The plants carrying the semidominant sdt allele exhibit reduced plant height, enhanced lodging resistance, increased tiller numbers per plant, and resulting in an increased grain yield. We also show that combining the sdt allele with the OsSPL14WFP allele can be effective in simultaneously improving tillering capacity and panicle branching, thereby leading to higher harvest index and grain yield. Most importantly, pyramiding of the sdt allele and the green revolution gene sd1 enhances grain yield by about 20% in hybrid rice breeding. Our results suggest that the manipulation of the polyadenylation status of OsmiR156 represents a novel strategy for improving the yield potential of rice over what is currently achievable.