Grain size and shape are important components determining rice grain yield, and they are controlled by quantitative trait loci (QTLs). Here, we report the cloning and functional characterization of a major grain length QTL, qGL3, which encodes a putative protein phosphatase with Kelch-like repeat domain (OsPPKL1). We found a rare allele qgl3 that leads to a long grain phenotype by an aspartate-to-glutamate transition in a conserved AVLDT motif of the second Kelch domain in OsPPKL1. The rice genome has other two OsPPKL1 homologs, OsPPKL2 and OsPPKL3. Transgenic studies showed that OsPPKL1 and OsPPKL3 function as negative regulators of grain length, whereas OsPPKL2 as a positive regulator. The Kelch domains are essential for the OsPPKL1 biological function. Field trials showed that the application of the qgl3 allele could significantly increase grain yield in both inbred and hybrid rice varieties, due to its favorable effect on grain length, filling, and weight.