The disaccharide trehalose has dramatic effects on plant metabolism, growth and development. Arabidopsis seedlings grown on trehalose-containing medium without sucrose display increased expression of the starch synthesis gene ApL3, hyper-accumulation of starch in the cotyledons and inhibition of root growth. Here we show that the ABI4 transcription factor mediates the effects of trehalose on starch metabolism and growth, independently of abscisic acid (ABA) synthesis and hexokinase (HXK1) signaling. Surprisingly, although the abi4 mutation partially rescued trehalose inhibition of root elongation, ApL3 expression levels were still enhanced. Gene expression analysis suggests that trehalose affects both starch synthesis and starch breakdown. The expression of genes involved in starch breakdown, such as SEX1 and the beta-amylase gene BMY8/BAM3, was strongly down-regulated in WT plants grown on trehalose but not in abi4 mutants. Addition of trehalose to liquid-grown WT seedlings also significantly reduced SEX1 expression after 6 h. Bypassing the need for starch breakdown by growth in continuous light or addition of sucrose rescued root growth on trehalose medium similar to the abi4 mutation. These results suggest that inhibition of starch mobilization rather than increased synthesis is involved in growth inhibition by exogenous trehalose. Trehalose also significantly enhanced ABI4 expression but reduced its sucrose induction, providing a possible molecular mechanism for the trehalose effect on plant gene expression and growth.