Shoot-branching patterns determine key aspects of plant life and are important targets for crop breeding. However, we are still largely ignorant of the genetic networks controlling locally themost important decision during branch development: whether the axillary bud, or branch primordium, grows out to give a lateral shoot or remains dormant. Here we show that, inside the buds, the TEOSINTE BRANCHED1, CYCLOIDEA, PCF (TCP) transcription factor BRANCHED1 (BRC1) binds to and positively regulates the transcription of three related Homeodomain leucine zipper protein (HD-ZIP)- encoding genes: HOMEOBOX PROTEIN 21 (HB21), HOMEOBOX PROTEIN 40 (HB40), and HOMEOBOX PROTEIN 53 (HB53). These three genes, together with BRC1, enhance 9-CIS-EPOXICAROTENOID DIOXIGENASE 3 (NCED3) expression, lead to abscisic acid accumulation, and trigger hormone response, thus causing suppression of bud development. This TCP/HD-ZIP genetic module seems to be conserved in dicot and monocotyledonous species to prevent branching under light-limiting conditions.