The formation of leaf polarity is critical for leaf morphogenesis. In this study, we characterized and cloned an Arabidopsis gene, AS1/2 ENHANCER7 (AE7), which is required for both leaf adaxial-abaxial polarity formation and normal cell proliferation. The ae7 mutant exhibited leaf adaxial-abaxial polarity defects and double mutants combining ae7 with the leaf polarity mutants as1 (asymmetric leaves1), as2, rdr6 (RNA-dependent RNA polymerase6) or ago7/zip (argonaute7/zippy) all resulted in plants with an apparently enhanced loss of adaxial leaf identity. In addition, ae7 also showed decreased cell proliferation in both leaves and roots, compensated by increased cell sizes in leaves. AE7 encodes a protein conserved in many eukaryotic organisms, ranging from unicellular yeasts to humans; however, the functions of AE7 family members from other species have not been reported. In situ hybridization revealed that AE7 is expressed in a spotted pattern in plant tissues, similar to cell-cycle marker genes such as HISTONE4. Moreover, the ae7 endoploidy and expression analysis of several cell-cycle marker genes in ae7 suggest that the AE7 gene is required for cell cycle progression. As the previously characterized 26S proteasome and ribosome mutants also affect both leaf adaxial-abaxial polarity and cell proliferation, similar to the defects in ae7, we propose that normal cell proliferation may be essential for leaf polarity establishment. Possible models for how cell proliferation influences leaf adaxial-abaxial polarity establishment are discussed.