A rice mutant with light-green leaves was discovered from a transgenic line of Oryza sativa. The mutant has reduced chlorophyll content and abnormal chloroplast morphology throughout its life cycle. Genetic analysis revealed that a single nuclear-encoded recessive gene is responsible for the mutation, here designated as lgl1. To isolate the lgl1 gene, a high-resolution physical map of the chromosomal region around the lgl1 gene was made using a mapping population consisting of 1984 mutant individuals. The lgl1 gene was mapped in the 76.5kb region between marker YG4 and marker YG5 on chromosome 12. Sequence analysis revealed that there was a 39bp deletion within the fourth exon of the candidate gene Os12g0420200 (TIGR locus Os12g23180) encoding a chloroplast stem-loop-binding protein of 41kDa b (CSP41b). The lgl1 mutation was rescued by transformation with the wild type CSP41b gene. Accordingly, the CSP41b gene is identified as the LGL1 gene. CSP41b was transcribed in various tissues and was mainly expressed in leaves. Expression of CSP41b-GFP fusion protein indicated that CSP41b is localized in chloroplasts. The expression levels of some key genes involved in chlorophyll biosynthesis and photosynthesis, such as ChlD, ChlI, Hema1, Ygl1, POR, Cab1R, Cab2R, PsaA, and rbcL, was significantly changed in the lgl1 mutant. Our results demonstrate that CSP41b is a novel gene required for normal leaf color and chloroplast morphology in rice.