The number of seeds per pod (NSPP) is one of most important yield components determining the productivity of many crop plants. Narrow leaflet soybean cultivars tend to have more seeds per pod than ovate leaflet cultivars. Here, we show that ln, a classical soybean locus that increases numbers of seeds per pod, is a gene (designated as GmJAGa) homologous to Arabidopsis JAGGED (JAG), a transcription factor that regulates lateral organ development and it has pleiotrophic effects on both leaflet shape and NSPP traits in soybean. The transition from dominant Ln to recessive ln phenotypes in soybean is associated with a single nucleotide substitution in the EAR motif of GmJAGa, which led to a single amino acid change. The introduction of the GmJAGa allele into a loss-of-function Arabidopsis jagged mutant partially restored the wild-type JAG phenotypes including leaf shape, flower opening and silique shape, but the Gmjaga allele in the jagged mutant did not result in an apparent phenotypic change. These observations indicate that, despite some degree of functional change of GmJAGa due to the divergence from Arabidopsis JAG, GmJAGa complements the functions of JAG in Arabidopsis. However, the GmJAGa homeolog, GmJAGb, which has more recently diverged from GmJAGa than from Arabidopsis JAG, appears to be sub- or neofunctionalized, as revealed by the differential expression of the two genes at multiple plant tissues, complementation test, and allelic analysis at both loci.