Plant leaves are the main photosynthetic organ of plants and they occur in an array of different shapes. Leaf shape is determined by morphogenesis whereby patterning of the leaf margin can result in interspaced leaf serrations, lobes, or leaflets, depending on the species, developmental stage, and in some instances the environment. In Arabidopsis, mutations in the homeodomain transcription factors SAW1 and SAW2 result in more prominent leaf margin serrations. Here we show that serrations appear precociously in the saw1 saw2 mutant. The pattern of auxin maxima, and of PIN1 and CUC2 expression, which form a feedback loop that drives serration outgrowth, is altered in saw1 saw2 and correlates with precocious serration initiation. SAW1 is not expressed in the outer epidermal cell layer where PIN1 convergence points generate auxin maxima. Instead, SAW1 is expressed on the adaxial side of the leaf and expression in this domain is sufficient for function. We suggest that SAW1 and SAW2 repress serration initiation and outgrowth by promoting the transition to a determinate fate in the leaf margin.