NARROW LEAF1 (NAL1) is an elite gene in rice (Oryza sativa), given its close connection to leaf photosynthesis, hybrid vigor, and yield-related agronomic traits; however, the underlying mechanism by which this gene affects these traits remains elusive. In this study, we systematically measured leaf photosynthetic parameters, leaf anatomical parameters, architectural parameters, and agronomic traits in indica cultivar 9311, in 9311 with the native NAL1 replaced by the Nipponbare NAL1 (9311-NIL), and in 9311 with the NAL1 fully mutated (9311-nal1). Leaf length, width, and spikelet number gradually increased from lowest to highest in 9311-nal1, 9311, and 9311-NIL. In contrast, the leaf photosynthetic rate on a leaf area basis, leaf thickness, and panicle number gradually decreased from highest to lowest in 9311-nal1, 9311, and 9311-NIL. RNA-seq analysis showed that NAL1 negatively regulates the expression of photosynthesis-related genes; NAL1 also influenced expression of many genes related to phytohormone signaling, as also shown by different leaf contents of 3-Indoleacetic acid, jasmonic acid, Gibberellin A3, and isopentenyladenine among these genotypes. Furthermore, field experiments with different planting densities showed that 9311 had a larger biomass and yield advantage under low planting density compared to either 9311-NIL or 9311-nall. This study shows both direct and indirect effects of NAL1 on leaf photosynthesis; furthermore, we show that a partially functional NAL1 allele helps maintain a balanced leaf photosynthesis and plant architecture for increased biomass and grain yield in the field.