Plastid-encoded RNA polymerase (PEP)-dependent transcription is an essential process for chloroplast development and plant growth. It is a complex event that is regulated by numerous nuclear-encoded proteins. In order to elucidate the complex regulation mechanism of PEP activity, identification and characterization of PEP activity regulation factors are needed. Here, we characterize Plastid Deficient 1 (PD1) as a novel regulator for PEP-dependent gene expression and chloroplast development in Arabidopsis. The PD1 gene encodes a protein that is conserved in photoautotrophic organisms. The Arabidopsis pd1 mutant showed albino and seedling-lethal phenotypes. The plastid development in the pd1 mutant was arrested. The PD1 protein localized in the chloroplasts, and it colocalized with nucleoid protein TRXz. RT-quantitative real-time PCR, northern blot, and run-on analyses indicated that the PEP-dependent transcription in the pd1 mutant was dramatically impaired, whereas the nuclear-encoded RNA polymerase-dependent transcription was up-regulated. The yeast two-hybrid assays and coimmunoprecipitation experiments showed that the PD1 protein interacts with PEP core subunit β (PEP-β), which has been verified to be essential for chloroplast development. The immunoblot analysis indicated that the accumulation of PEP-β was barely detected in the pd1 mutant, whereas the accumulation of the other essential components of the PEP complex, such as core subunits α and β′, were not affected in the pd1 mutant. These observations suggested that the PD1 protein is essential for the accumulation of PEP-β and chloroplast development in Arabidopsis, potentially by direct interaction with PEP-β.