Achieving increased grain productivity has long been the overriding focus of cereal breeding programs. The ideotype approach has been used to improve rice yield potential at the International Rice Research Institute and in China. However, the genetic basis of yield-related traits in rice remains unclear. Here, we show that a major quantitative trait locus, qNPT1, acts through the determination of a 'new plant type' (NPT) architecture characterized by fewer tillers, sturdier culms and larger panicles, and it encodes a deubiquitinating enzyme with homology to human OTUB1. Downregulation of OsOTUB1 enhances meristematic activity, resulting in reduced tiller number, increased grain number, enhanced grain weight and a consequent increase in grain yield in rice. Unlike human OTUB1, OsOTUB1 can cleave both K48- and K63-linked polyubiquitin. OsOTUB1 interacts with the E2 ubiquitin-conjugating protein OsUBC13 and the squamosa promoter-binding protein-like transcription factor OsSPL14. OsOTUB1 and OsSPL14 share common target genes, and their physical interaction limits K63-linked ubiquitination (K63Ub) of OsSPL14, which in turn promotes K48Ub-dependent proteasomal degradation of OsSPL14. Conversely, loss-of-function of OsOTUB1 is correlated with the accumulation of high levels of OsSPL14, resulting in the NPT architecture. We also demonstrated that pyramiding of high-yielding npt1 and dep1-1 alleles provides a new strategy for increasing rice yield potential above what is currently achievable.