The early nodulin ENOD40 has been proposed as playing a pivotal role in the organogenesis of legume root nodules. We have isolated the ENOD40 gene homologues ObENOD40 and OsENOD40 from the wild and cultivated rice genotypes Oryza brachyantha and Oryza sativa, respectively. Rice ENOD40s contain a sequence at the 5′ end (region I) for encoding an oligopeptide that is highly conserved in all legume ENOD40s. Furthermore, at the 3′ end (region II), the nucleotide sequence of rice ENOD40s exhibited a considerable homology to the corresponding region in legume ENOD40s. Among various organs of the rice plant, expression of OsENOD40 was detected only in stems. In situ hybridization studies revealed that, within the stem, transcription of OsENOD40 is confined to parenchyma cells surrounding the protoxylem during the early stages of development of lateral vascular bundles that conjoin an emerging leaf. Expression pattern of OsENOD40 promoter-GUS fusion in nodules developed on transgenic hairy roots of soybean was also found to be restricted to peripheral cells of nodule vascular bundles, thus evidencing that rice ENOD40 promoter activity is essentially the same as that of soybean ENOD40. Taken together, these results strongly suggest that OsENOD40 and legume ENOD40s share common, if not identical, functions in differentiation and/or function of vascular bundles.