Chloroplast development requires coordinated expression of both nuclear- and chloroplast-encoded genes. To better understand the roles played by nuclear-encoded chloroplast proteins in chloroplast biogenesis, we isolated an Arabidopsis mutant, egy1-1, which has a dual phenotype, reduced chlorophyll accumulation and abnormal hypocotyl gravicurvature. Subsequent map-based cloning and DNA sequencing of the mutant gene revealed a 10-bp deletion in an EGY1 gene, which encodes a 59-kDa metalloprotease that contains eight trans-membrane domains at its C-terminus, and carries out beta-casein degradation in an ATP-independent manner. EGY1 protein accumulation varies between tissue types, being most prominent in leaf and stem tissues, and is responsive to light and ethylene. EGY1-GFP hybrid proteins are localized in the chloroplast. egy1 mutant chloroplasts had reduced granal thylakoids and poorly developed lamellae networks. Furthermore, the accumulation of chlorophyll a/b binding proteins of the light-harvesting complexes I and II (Lhca and Lhcb) are significantly decreased in three separate loss-of-function egy1 mutants. Taken together, these results suggest that EGY1 metalloprotease is required for chloroplast development and, hence, a defective EGY1 gene has pleiotropic effects both on chloroplast development and on ethylene-dependent gravitropism of light-grown hypocotyls.