De novo shoot regeneration via the two-step tissue culture method is widely used for vegetative reproduction of plants and for gene transformation and editing. A key step in tissue culture is the fate transition from shoot progenitor cells (SPCs) to productive SPCs (prSPCs), which are capable of differentiating into a shoot. In this study, we identified the class I KNOTTED1-like homeobox (KNOX) transcription factor gene SHOOT-MERISTEMLESS (STM) as the key controller of, and marker gene for, the fate transition from SPCs into prSPCs, indicating that STM might serve as a candidate of molecular tools to improve de novo shoot regeneration in the agricultural applications.