The spikelet is the basal unit of inflorescence in grasses, and its formation is crucial for reproductive success and cereal yield. Here, we report a previously unknown role of the plant hormone jasmonic acid (JA) in determining rice (Oryza sativa) spikelet morphogenesis. The extra glume 1 (eg1) and eg2 mutants exhibit altered spikelet morphology with changed floral organ identity and number, as well as defective floral meristem determinacy. We show that EG1 is a plastid-targeted lipase that participates in JA biosynthesis, and EG2/OsJAZ1 is a JA signalling repressor that interacts with a putative JA receptor, OsCOI1b, to trigger OsJAZ1's degradation during spikelet development. OsJAZ1 also interacts with OsMYC2, a transcription factor in the JA signalling pathway, and represses OsMYC2's role in activating OsMADS1, an E-class gene crucial to the spikelet development. This work discovers a key regulatory mechanism of grass spikelet development and suggests that the role of JA in reproduction has diversified during the flowering plant evolution.