Grain yield is controlled by quantitative trait loci (QTLs) derived from natural variations in many crop plants. Here we report the molecular characterization of a major rice grain yield QTL that acts through the determination of panicle architecture. The dominant allele at the DEP1 locus is a gain-of-function mutation causing truncation of a phosphatidylethanolamine-binding protein-like domain protein. The effect of this allele is to enhance meristematic activity, resulting in a reduced length of the inflorescence internode, an increased number of grains per panicle and a consequent increase in grain yield. This allele is common to many Chinese high-yielding rice varieties and likely represents a relatively recent introduction into the cultivated rice gene pool. We also show that a functionally equivalent allele is present in the temperate cereals and seems to have arisen before the divergence of the wheat and barley lineages.