Organisms are covered extracellularly with cuticular waxes that consist of various fatty acids. In higher plants, extracellular waxes act as indispensable barriers to protect the plants from physical and biological stresses such as drought and pathogen attacks. However, the effect of fatty acid composition on plant development under normal growth conditions is not well understood. Here we show that the ONION1 (ONI1) gene, which encodes a fatty acid elongase (β-ketoacyl CoA synthase) involved in the synthesis of very-long-chain fatty acids, is required for correct fatty acid composition and normal shoot development in rice. oni1 mutants containing a reduced amount of very-long-chain fatty acids produced very small shoots, with an aberrant outermost epidermal cell layer, and ceased to grow soon after germination. These mutants also showed abnormal expression of a KNOX family homeobox gene. ONI1 was specifically expressed in the outermost cell layer of the shoot apical meristem and developing lateral organs. These results show that fatty acid elongase is required for formation of the outermost cell layer, and this layer is indispensable for entire shoot development in rice.