Seed development in Arabidopsis thaliana undergoes an initial phase of endosperm proliferation followed by a second phase in which the embryo grows at the expense of the endosperm. As mature seed size is largely attained during the initial phase, seed size is coordinately determined by the growth of the maternal ovule, endosperm, and embryo. Here, we identify SHORT HYPOCOTYL UNDER BLUE1 (SHB1) as a positive regulator of Arabidopsis seed development that affects both cell size and cell number. shb1-D, a gain-of-function overexpression allele, increases seed size, and shb1, a loss-of-function allele, reduces seed size. SHB1 is transmitted zygotically. The increase in shb1-D seed size is associated with endosperm cellurization, chalazal endosperm enlargement, and embryo development. SHB1 is required for the proper expression of two other genes that affect endosperm development, MINISEED3 (MINI3) and HAIKU2 (IKU2), a WRKY transcription factor gene and a leucine-rich repeat receptor kinase gene. SHB1 associates with both MINI3 and IKU2 promoters in vivo. SHB1 may act with other proteins that bind to MINI3 and IKU2 promoters to promote a large seed cavity and endosperm growth in the early phase of seed development. In the second phase, SHB1 enhances embryo cell proliferation and expansion through a yet unknown IKU2-independent pathway.