Telomeres are specialized nucleoprotein complexes that function to protect eukaryotic chromosomes from recombination and erosion. Several telomere binding proteins (TBPs) have been characterized in higher plants, but their detailed in vivo functions at the plant level are largely unknown. In this study, we identified and characterized OsTRFL1 (Oryza sativa Telomere Repeat-binding Factor Like 1) in rice, a monocot model crop. Although OsTRFL1 did not directly bind to telomere repeats (TTTAGGG)4 in vitro, it was associated with telomeric sequences in planta. OsTRFL1 interacted with rice TBPs, such as OsTRBF1 and RTBP1, in yeast and plant cells as well as in vitro. Thus, it seems likely that the association of OsTRFL1 with other TBPs enables OsTRFL1 to bind to telomeres indirectly. T-DNA inserted OsTRFL1 knock-out mutant rice plants displayed significantly longer telomeres (6–25 kb) than those (5–12 kb) in wild-type plants, indicating that OsTRFL1 is a negative factor for telomere lengthening. The reduced levels of OsTRFL1 caused serious developmental defects in both vegetative and reproductive organs of rice plants. These results suggest that OsTRFL1 is an essential factor for the proper maintenance of telomeres and normal development of rice.