Transgenic tobacco plants expressing a cyanobacterial fructose-1,6/sedoheptulose-1,7-bisphosphatase targeted to chloroplasts show enhanced photosynthetic efficiency and growth characteristics under atmospheric conditions (360 p.p.m. CO2). Compared with wild-type tobacco, final dry matter and photosynthetic CO2 fixation of the transgenic plants were 1.5-fold and 1.24-fold higher, respectively. Transgenic tobacco also showed a 1.2-fold increase in initial activity of ribulose 1,5 bisphosphate carboxylase/oxygenase (Rubisco) compared with wild-type plants. Levels of intermediates in the Calvin cycle and the accumulation of carbohydrates were also higher than those in wild-type plants. This is the first report in which expression of a single plastid-targeted enzyme has been shown to improve carbon fixation and growth in transgenic plants.