Development in multicellular organisms requires a strict balance between cell division and differentiation. The simple architecture of the Arabidopsis thaliana root makes it an ideal model for studying molecular mechanisms controlling both the transition from cell division to cell differentiation and cell fate determination. The class III Homeodomain-Leucine Zipper (HD-ZIP III) transcription factors (TFs) are well known developmental regulators, controlling important aspects of embryogenesis, shoot meristem activity, leaf polarity and vascular patterning. The HD-ZIP III TFs are under post-transcriptional control of microRNA165 (miR165) and miR166. In this thesis, I present a cell-to-cell signalling pathway underlying root vascular patterning and describe signaling pathways downstream of the HD-ZIP III TFs in their control of root development. The TF SHORTROOT (SHR), moves from the vascular stele cells to the surrounding endodermal cell layer. We show that SHR acts here to transcriptionally activate MIR165A and MIR166B, and the miR165/6 produced in the endodermis act non-cell autonomously to post-transcriptionally restrict HD-ZIP III mRNA levels in the peripheral stele. The resulting graded HD-ZIP III activity domain in the radial stele dose-dependently determines vascular cell type; high levels of HD-ZIP III in the central stele result in metaxylem formation while lower levels in the peripheral stele result in protoxylem. We provide evidence that the HD-ZIP III factors act as de novo xylem specifiers, because the quintuple mutant lacking all five HD-ZIP III genes forms no xylem. Furthermore, reducing the plasmodesmatal aperture through callose accumulation inhibits the bi-directional mobility of both signalling molecules, providing evidence that both SHR and miR165/6 move cell-to-cell via plasmodesmata to control root development. I present downstream components of the miR165/HD-ZIP III TFs in the root meristem, identified through a time-course induction of miR165 coupled to transcriptome analyses. This experiment revealed novel roles for HD-ZIP III TFs in vascular patterning and meristem size control. I show that HD-ZIP III directed repression of auxin hormone signalling in the xylem axis is essential for proper xylem differentiation. Furthermore, I provide data to show that they also control the balance of reactive oxygen species in the root meristem, thereby directing meristem size and ultimately controlling root growth.