AINTEGUMENTA-LIKE (AIL) transcription factors are key regulators of cell proliferation and meristem identity. Although AIL functions have been well described, the direct signalling components of this pathway are largely unknown.We show that BABY BOOM(BBM) and other AIL proteins physically interact with multiple members of the L1-expressed HOMEODOMAIN GLABROUS (HDG) transcription factor family, including HDG1, HDG11 and HDG12. Overexpression of HDG1, HDG11 and HDG12 restricts growth due to root and shoot meristem arrest, which is associated with reduced expression of genes involved in meristem development and cell proliferation pathways, whereas downregulation of multiple HDG genes promotes cell overproliferation. These results suggest a role for HDG proteins in promoting cell differentiation. We also reveal a transcriptional network in which BBM andHDG1regulate several common target genes, and whereBBM/AIL and HDG regulate the expression of each other. Taken together, these results suggest opposite roles for AIL and HDG proteins, with AILs promoting cell proliferation and HDGs stimulating cell differentiation, and that these functions are mediated at both the protein-protein interaction and transcriptional level.