The actin cytoskeleton is an important regulator of cell expansion and morphogenesis in plants. However, the molecular mechanisms linking the actin cytoskeleton to these processes remain largely unknown. Here, we report the functional analysis of rice (Oryza sativa) FH5/BENT UPPERMOST INTERNODE1 (BUI1), which encodes a formin-type actin nucleation factor and affects cell expansion and plant morphogenesis in rice. The bui1 mutant displayed pleiotropic phenotypes, including bent uppermost internode, dwarfism, wavy panicle rachis, and enhanced gravitropic response. Cytological observation indicated that the growth defects of bui1 were caused mainly by inhibition of cell expansion. Map-based cloning revealed that BUI1 encodes the class II formin FH5. FH5 contains a phosphatase tensin-like domain at its amino terminus and two highly conserved formin-homology domains, FH1 and FH2. In vitro biochemical analyses indicated that FH5 is capable of nucleating actin assembly from free or profilin-bound monomeric actin. FH5 also interacts with the barbed end of actin filaments and prevents the addition and loss of actin subunits from the same end. Interestingly, the FH2 domain of FH5 could bundle actin filaments directly and stabilize actin filaments in vitro. Consistent with these in vitro biochemical activities of FH5/BUI1, the amount of filamentous actin decreased, and the longitudinal actin cables almost disappeared in bui1 cells. The FH2 or FH1FH2 domains of FH5 could also bind to and bundle microtubules in vitro. Thus, our study identified a rice formin protein that regulates de novo actin nucleation and spatial organization of the actin filaments, which are important for proper cell expansion and rice morphogenesis.