Altered pigmentation is an easily scored and sensitive monitor of plastid function. We analyzed in detail a yellow colored transposon-tagged mutant (dal1-2) that is allelic to the da1 mutant previously identified (Babiychuk et al., 1997). Mesophyll cells of mutant plants possess abnormal nucleoids and more but smaller plastids than wild type cells. Plastid development in dal1-2 is not altered in the dark but is arrested at the early steps of thylakoid assembly. The amino acid sequence of the protein deduced from our cDNA clone is 21 amino acids longer than the previously published DAL sequence (Babiychuk et al., 1997) and allowed us to show that DAL codes for a chloroplast protein. The dal1-2 mutation has a global negative effect on plastid RNA accumulation and on expression of nuclear encoded photosynthetic genes. We show that the plastid RNA polymerases, the nuclear-encoded NEP and the plastid-encoded PEP, are functional in the mutant. Precursor 16S and 23S rRNA species specifically accumulate at a high level in the mutant but the 5'-end and the long 3'-end trailer are not modified. We suggest that the dal mutation is involved in plastid rRNA processing and consequently in translation and early chloroplast differentiation.