Auxin plays a key role in lateral root formation, but the signaling pathway for this process is poorly understood. We show here that NAC1, a new member of the NAC family, is induced by auxin and mediates auxin signaling to promote lateral root development. NAC1 is a transcription activator consisting of an N-terminal conserved NAC-domain that binds to DNA and a C-terminal activation domain. This factor activates the expression of two downstream auxin-responsive genes, DBP and AIR3. Transgenic plants expressing sense or antisense NAC1 cDNA show an increase or reduction of lateral roots, respectively. Finally, TIR1-induced lateral root development is blocked by expression of antisense NAC1 cDNA, and NAC1 overexpression can restore lateral root formation in the auxin-response mutant tir1, indicating that NAC1 acts downstream of TIR1.