Technical Abstract: Plant development depends on the activity of apical meristems, groups of indeterminate cells whose derivatives elaborate the organs of the mature plant. Studies of knotted1 (kn1) and related gene family members have determined potential roles for homeobox genes in the function of shoot meristems. The Arabidopsis kn1-like gene, KNAT1, is expressed in the shoot tapical meristem and not in determinate organs. Here we show that ectopic expression of KNAT1 in Arabidopsis transforms simple leaves into lobed leaves. The lobes initiate in the position of serrations yet have features of leaves, such as stipules, which form in the sinus, the region at the base of two lobes. Ectopic meristems also arise in the sinus region close to veins. Identity of the meristem, i.e., vegetative or floral, depends on whether the meristem develops on a rosette or cauline leaf, respectively. Using in situ hybridization, we analyzed the expression of KNAT1 and another kn1-like homeobox gene, SHOOT MERISTEMLESS, in cauliflower mosaic virus 35S::KNAT1 transformants. KNAT1 expression is strong in vasculature, possibly explaining the proximity of the ectopic meristems to veins. After leaf cells have formed a layered meristem, SHOOT MERISTEMLESS expression begins in only a subset of these cells, demonstrating that KNAT1 is sufficient to induce meristems in the leaf. The shoot-like features of the lobed leaves are consistent with the normal domain of KNAT1 s expression and further suggest that kn1-related genes may have played a role in the evolution of leaf diversity.