Grain size and shape are important components of grain yield and quality and have been under selection since cereals were first domesticated. Here, we show that a quantitative trait locus GW8 is synonymous with OsSPL16, which encodes a protein that is a positive regulator of cell proliferation. Higher expression of this gene promotes cell division and grain filling, with positive consequences for grain width and yield in rice. Conversely, a loss-of-function mutation in Basmati rice is associated with the formation of a more slender grain and better quality of appearance. The correlation between grain size and allelic variation at the GW8 locus suggests that mutations within the promoter region were likely selected in rice breeding programs. We also show that a marker-assisted strategy targeted at elite alleles of GS3 and OsSPL16 underlying grain size and shape can be effectively used to simultaneously improve grain quality and yield.