Although susceptibility to seed shattering causes severe yield loss during cereal crop harvest, it is an adaptive trait for seed dispersal in wild plants. We previously identified a recessive shattering locus, sh-h, from the rice shattering mutant line Hsh that carries an enhanced abscission layer. Here, we further mapped sh-h to a 34-kb region on chromosome 7 by analyzing 240 F(2) plants and five F(3) lines from the cross between Hsh and Blue&Gundil. Hsh had a point mutation at the 3' splice site of the seventh intron within LOC_Os07g10690, causing a 15-bp deletion of its mRNA as a result of altered splicing. Two transferred DNA (T-DNA) insertion mutants and one point mutant exhibited the enhanced shattering phenotype, confirming that LOC_Os07g10690 is indeed the sh-h gene. RNA interference (RNAi) transgenic lines with suppressed expression of this gene exhibited greater shattering. This gene, which encodes a protein containing a conserved carboxy-terminal domain (CTD) phosphatase domain, was named Oryza sativa CTD phosphatase-like 1 (OsCPL1). Subcellular localization and biochemical analysis revealed that the OsCPL1 protein is a nuclear phosphatase, a common characteristic of metazoan CTD phosphatases involved in cell differentiation. These results demonstrate that OsCPL1 represses differentiation of the abscission layer during panicle development.