Land plant bodies develop from stem cells located in meristems. However, we know little about how meristems initiate from non-meristematic cells. The haploid body of bryophytes develops from unicellular spores in isolation from the parental plant, which allows all stages of development to be observed. We discovered that the Marchantia spore undergoes a series of reproducibly oriented cell divisions to generate a flat prothallus on which a meristem later develops de novo. The young sporeling comprises an early cell mass. One cell of the early cell mass elongates and undergoes a formative division that produces the prothalloblast, which initiates prothallus formation. A symmetric division of the prothalloblast followed by two transverse divisions generates a four-celled plate that expands into a flat disc through oblique divisions in three of the four plate-cell-derived quadrants. One quadrant gives rise to a flat flabellum. A notch with a meristem and apical stem cell develops at the margin of the flabellum. The transcription factor Marchantia class III homeodomain-leucine-zipper (MpC3HDZ) is a marker of the first flat prothallus structure and polarizes to the dorsal tissues of flabella and meristems. Mpc3hdz mutants are defective in setting up dorsoventrality and thallus body flatness. We report how a regular set of cell divisions forms the prothallus-the first dorsoventral structure-and how cells on the margin of the prothallus develop a dorsoventralized meristem de novo.