Although root system architecture is known to be highly plastic and strongly affected by environmental conditions, we have little understanding of the underlying mechanisms controlling root system development. Here we demonstrate that the formation of a lateral root from a lateral root primordium is repressed as water availability is reduced. This osmotic-responsive regulatory mechanism requires abscisic acid (ABA) and a newly identified gene, LRD2. Mutant analysis also revealed interactions of ABA and LRD2 with auxin signaling. Surprisingly, further examination revealed that both ABA and LRD2 control root system architecture even in the absence of osmotic stress. This suggests that the same molecules that mediate responses to environmental cues can also be regulators of intrinsic developmental programs in the root system.