The semi-dwarfing allele, sd1-d, has been widely utilized in developing high-yielding rice cultivars across the world. Originally identified from the rice cultivar Dee-Geo-Woo-Gen (DGWG), sd1-d, derived from a spontaneous mutation, has a 383-bp deletion in the SD1 gene. To date, as many as seven alleles of the SD1 gene have been identified and used in rice improvement, either with a functional single-nucleotide polymorphism (SNP), with insertion–deletions (InDels), or both. Here, we report discovery of a novel SNP in the SD1 gene from the rice genotype, Pusa 1652. Genetic analysis revealed that the inheritance of the semi-dwarfism in Pusa 1652 is monogenic and recessive, but it did not carry the sd1-d allele. However, response to exogenous gibberellic acid (GA3) application and the subsequent bulked segregant and linkage analyses confirmed that the SD1 gene is involved in the plant height reduction in Pusa 1652. Sequencing of the SD1 gene from Pusa 1652 revealed a novel transition in exon 3 (T/A) causing a nonsense mutation at the 300th codon. The stop codon leads to premature termination, resulting in a truncated protein of OsGA20ox2 obstructing the GA3 biosynthesis pathway. This novel recessive allele, named sd1-bm, is derived from Bindli Mutant 34 (BM34), a γ-ray induced mutant of a short-grain aromatic landrace, Bindli. BM34 is the parent of an aromatic semi-dwarf cultivar, Pusa 1176, from which Pusa 1652 is derived. The semi-dwarfing allele, sd1-bm, was further validated by developing a derived cleaved amplified polymorphic sequence (dCAPS) marker, AKS-sd1. This allele provides an alternative to the most widely used sd1-d in rice improvement programs and the functional dCAPS marker will facilitate marker-assisted introgression of the semi-dwarf trait into tall genotypes.