Vipp1 (vesicle inducing protein in plastids 1) is found in cyanobacteria and chloroplasts where it is essential for thylakoid formation. Arabidopsis thaliana mutant plants with a reduction of Vipp1 to about 20% of wild type content become albinotic at an early stage. We propose that this drastic phenotype results from an inability of the remaining Vipp1 protein to assemble into a homo-oligomeric complex, indicating that oligomerization is a prerequisite for Vipp1 function. A Vipp1-ProteinA fusion protein, expressed in the Deltavipp1 mutant background, is able to reinstate oligomerization and restore photoautotrophic growth. Plants containing Vipp1-ProteinA in amounts comparable to Vipp1 in the wild type exhibit a wild type phenotype. However, plants with a reduced amount of Vipp1-ProteinA protein are growth-retarded and significantly paler than the wild type. This phenotype is caused by a decrease in thylakoid membrane content and a concomitant reduction in photosynthetic activity. To the extent that thylakoid membranes are made in these plants they are properly assembled with protein-pigment complexes and are photosynthetically active. This strongly supports a function of Vipp1 in basic thylakoid membrane formation and not in the functional assembly of thylakoid protein complexes. Intriguingly, electron microscopic analysis shows that chloroplasts in the mutant plants are not equally affected by the Vipp1 shortage. Indeed, a wide range of different stages of thylakoid development ranging from wild-type-like chloroplasts to plastids nearly devoid of thylakoids can be observed in organelles of one and the same cell.