tRNase Z (TRZ) is a ubiquitous endonuclease that removes the 3′-trailer from precursor tRNAs during maturation. In yeast and animals, TRZ regulates the cell cycle via its (t)RNA processing activity; however, its physiological function in higher plants has not been well characterized. This study describes the identification of a rice (Oryza sativa) TRZ2 mutant; plants homozygous for the osatrz2 mutation were albinos with deficient chlorophyll content. A microscopic analysis of the mutant plants revealed that the transition of proplastids to chloroplasts was arrested at an early stage, and the number and size of the plastids in callus cells was substantially decreased. A genetic complementation test and an RNA interference analysis confirmed that disruption of OsaTRZ2 was responsible for the mutant phenotype. OsaTRZ2 is expressed in all rice tissues, but is preferentially expressed in leaves, sheathes, and calli. OsaTRZ2 was subcellularly localized in chloroplasts, and displayed tRNA 3′-end processing activity in both in vitro and in vivo assays. In the osatrz2 mutants, transcription of plastid-encoded and nucleus-encoded RNA polymerases was severely reduced and moderately increased, respectively. These results suggest that the tRNA 3′ processing activity of OsaTRZ2 contributes to chloroplast biogenesis.