Abstract: <h2>Summary</h2> Lateral inhibition patterns differentiated cell types among equivalent cells during development in bacteria, metazoans, and plants. Tip-growing rhizoid cells develop among flat epidermal cells in the epidermis of the early-diverging land plant <i>Marchantia polymorpha</i>. We show that the majority of rhizoid cells develop individually, but some develop in linear, one-dimensional groups (chains) of between 2 and 7 rhizoid cells in wild-type plants. The distribution of rhizoid cells can be accounted for within a simple cellular automata model of lateral inhibition. The model predicted that in the absence of lateral inhibition, two-dimensional rhizoid cell groups (clusters) form. These can be larger than those formed with lateral inhibition. <i>M. polymorpha</i> rhizoid differentiation is positively regulated by the ROOT HAIR DEFECTIVE SIX-LIKE1 (MpRSL1) basic-helix-loop-helix (bHLH) transcription factor, which is directly repressed by the FEW RHIZOIDS1 (MpFRH1) microRNA (miRNA). To test if MpFRH1 miRNA acts during lateral inhibition, we generated loss-of-function (lof) mutants without the MpFRH1 miRNA. Two-dimensional clusters of rhizoids develop in Mp<i>frh1</i><sup>lof</sup> mutants as predicted by the model for plants that lack lateral inhibition. Furthermore, two-dimensional clusters of up to 9 rhizoid cells developed in the Mp<i>frh1</i><sup>lof</sup> mutants compared to a maximum number of 7 observed in wild-type groups. The higher steady-state levels of Mp<i>RSL1</i> mRNA in Mp<i>frh1</i><sup>lof</sup> mutants indicate that MpFRH1-mediated lateral inhibition involves the repression of MpRSL1 activity. Together, the modeling and genetic data indicate that MpFRH1 miRNA mediates lateral inhibition by repressing MpRSL1 during pattern formation in the <i>M. polymorpha</i> epidermis.