The hormone cytokinin (CK) controls root length in Arabidopsis thaliana by defining where dividing cells, derived from stem cells of the root meristem, start to differentiate [1,2,3,4,5,6]. However, the regulatory inputs directing CK to promote differentiation remain poorly understood. Here, we show that the HD-ZIPIII transcription factor PHABULOSA (PHB) directly activates the CK biosynthesis gene ISOPENTENYL TRANSFERASE 7 (IPT7), thus promoting cell differentiation and regulating root length. We further demonstrate that CK feeds back to repress both PHB and microRNA165, a negative regulator of PHB. These interactions comprise an incoherent regulatory loop in which CK represses both its activator and a repressor of its activator. We propose that this regulatory circuit determines the balance of cell division and differentiation during root development and may provide robustness against CK fluctuations.