Strigolactones (SLs) are carotenoid-derived plant hormones that regulate shoot branching, secondary growth, root development, and responses to soil phosphate. In Arabidopsis (Arabidopsis thaliana), SL biosynthesis requires the sequential action of two carotenoid cleavage dioxygenases, MORE AXILLARY GROWTH3 (MAX3) and MAX4, followed by a cytochrome P450, MAX1. In rice (Oryza sativa), the plastid-localized protein DWARF27 (OsD27) is also necessary for SL biosynthesis, but the equivalent gene in Arabidopsis has not been identified. Here, we use phylogenetic analysis of D27-like sequences from photosynthetic organisms to identify AtD27, the likely Arabidopsis ortholog of OsD27. Using reverse genetics, we show that AtD27 is required for the inhibition of secondary bud outgrowth and that exogenous application of the synthetic SL GR24 can rescue the increased branching phenotype of an Atd27 mutant. Furthermore, we use grafting to demonstrate that AtD27 operates on a nonmobile precursor upstream of MAX1 in the SL biosynthesis pathway. Consistent with the plastid localization of OsD27, we also show that AtD27 possesses a functional plastid transit peptide. We demonstrate that AtD27 transcripts are subject to both local feedback and auxin-dependent signals, albeit to a lesser extent than MAX3 and MAX4, suggesting that early steps in SL biosynthesis are coregulated at the transcriptional level. By identifying an additional component of the canonical SL biosynthesis pathway in Arabidopsis, we provide a new tool to investigate the regulation of shoot branching and other SL-dependent developmental processes.