Chloroplast development is fundamental to photosynthesis and plant growth but is sensitive to environmental stress. Chloroplast development and division require genome stability and DNA repair, but the underlying mechanisms have been unclear. Using a forward genetic approach, we identified the striped-leaf mutant k48 in the rice (Oryza sativa L. japonica) cultivar KY131 background. k48 displayed defects in chloroplast development and photosynthesis, especially under high-light conditions. Genetic and complementation studies revealed that the loss of ESSENTIAL MEIOTIC ENDONUCLEASE 1 (EME1) is responsible for the defects in k48. Transcriptomic analysis showed that OsEME1 globally regulates the expression of genes involved in photosynthesis and DNA repair. Furthermore, mutations in OsEME1 led to cell cycle arrest and a DNA damage response. An in vitro endonuclease activity assay indicated that OsEME1 directly binds to and cleaves DNA substrates with a specific structure and that four conserved amino acids are required for its activity. Notably, OsEME1 targeted DNA fragments of rice GOLDEN-LIKE 1 (GLK1) and GLK2. We also demonstrated that OsEME1 interacts with the structure-specific endonuclease methyl methanesulfonate (MMS) and UV-SENSITIVE PROTEIN 81 (MUS81). This study highlights the role of OsEME1 in regulating chloroplast development by modulating homologous recombination repair in response to damage to double-stranded DNA.