Injured plant somatic tissues regenerate themselves by establishing shoot or root meristems. In Arabidopsis (Arabidopsis thaliana), a two-step culture system ensures regeneration by first promoting the acquisition of pluripotency and subsequently specifying the fate of new meristems. Although previous studies have reported the importance of phytohormones auxin and cytokinin in determining the fate of new meristems, whether and how environmental factors influence this process remains elusive. In this study, we investigated the impact of light signals on shoot regeneration using Arabidopsis hypocotyls as explants. We found that light signals promote shoot regeneration while inhibiting root formation. ELONGATED HYPOCOTYL 5 (HY5), the pivotal transcriptional factor in light signaling, plays a central role in this process by mediating the expression of key genes controlling the fate of new meristems. Specifically, HY5 directly represses root development genes and activates shoot meristem genes, leading to the establishment of shoot progenitor from pluripotent callus. We further demonstrated that the early activation of photosynthesis is critical for shoot initiation, and this is transcriptionally regulated downstream of HY5-dependent pathways. In conclusion, we uncovered the intricate molecular mechanisms by which light signals control the establishment of new meristems through the regulatory network governed by HY5, thus highlighting the influence of light signals on plant developmental plasticity.