Lateral organ boundary formation is highly regulated by transcription factors and hormones such as auxins and brassinosteroids. However, in contrast to many other developmental processes in plants, no role for signalling peptides in the regulation of this process has been reported yet. The first characterization of the secreted cysteine-rich TAXIMIN (TAX) signalling peptides in Arabidopsis is presented here. TAX1 overexpression resulted in minor alterations in the primary shoot and root metabolome, abnormal fruit morphology, and fusion of the base of cauline leaves to stems forming a decurrent leaf attachment. The phenotypes at the paraclade junction match TAX1 promoter activity in this region and are similar to loss of LATERAL ORGAN FUSION (LOF) transcription factor function. Nevertheless, TAX1 expression was unchanged in lof1lof2 paraclade junctions and, conversely, LOF gene expression was unchanged in TAX1 overexpressing plants, suggesting TAX1 may act independently. This study identifies TAX1 as the first plant signalling peptide influencing lateral organ separation and implicates the existence of a peptide signal cascade regulating this process in Arabidopsis.