The deployment of heterosis in the form of hybrid rice varieties has boosted grain yield, but grain quality improvement still remains a challenge. Here we show that a quantitative trait locus for rice grain quality, qGW7, reflects allelic variation of GW7, a gene encoding a TONNEAU1-recruiting motif protein with similarity to C-terminal motifs of the human centrosomal protein CAP350. Upregulation of GW7 expression was correlated with the production of more slender grains, as a result of increased cell division in the longitudinal direction and decreased cell division in the transverse direction. OsSPL16 (GW8), an SBP-domain transcription factor that regulates grain width, bound directly to the GW7 promoter and repressed its expression. The presence of a semidominant GW7(TFA) allele from tropical japonica rice was associated with higher grain quality without the yield penalty imposed by the Basmati gw8 allele. Manipulation of the OsSPL16-GW7 module thus represents a new strategy to simultaneously improve rice yield and grain quality.