Appropriate leaf rolling enhances erect-leaf habits and photosynthetic efficiency, which consequently improves grain yield. Here, we reported the novel lateral organ boundaries domain (LBD) gene OsLBD3-7, which is involved in the regulation of leaf rolling. OsLBD3-7 works as a transcription activator and its protein is located on the plasma membrane and in the nucleus. Overexpression of OsLBD3-7 leads to narrow and adaxially rolled leaves. Microscopy of flag leaf cross-sections indicated that overexpression of OsLBD3-7 led to a decrease in both bulliform cell size and number. Transcriptional analysis showed that key genes that had been reported to be negative regulators of bulliform cell development were up-regulated in transgenic plants. These results indicated that OsLBD3-7 might acts as an upstream regulatory gene of bulliform cell development to regulate leaf rolling, which will give more insights on the leaf rolling regulation mechanism.