Heme, an organometallic tetrapyrrole, is widely engaged in oxygen transport, electron delivery, enzymatic reactions, and signal transduction. In plants, it is also involved in photomorphogenesis and photosynthesis. HEME OXYGENASE 1 (HO1) initiates the first committed step in heme catabolism, and it has generally been thought that this reaction takes place in chloroplasts. Here, we show that HO1 in both Arabidopsis (Arabidopsis thaliana) and rice (Oryza sativa) has two transcription start sites (TSSs), producing long (HO1L) and short (HO1S) transcripts. Their products localize to the chloroplast and the cytosol, respectively. During early development or de-etiolation, the HO1L/HO1S ratio gradually increases. Light perception via phytochromes and cryptochromes elevates the HO1L/HO1S ratio in the whole seedling through the functions of ELONGATED HYPOCOTYL 5 (HY5) and HY5 HOMOLOG (HYH) and through the suppression of DE-ETIOLATED 1 (DET1), CONSTITUTIVE PHOTOMORPHOGENESIS 1 (COP1), and PHYTOCHROME INTERACTING FACTORs (PIFs). HO1L introduction complements the HO1-deficient mutant; surprisingly, HO1S expression also restores the short hypocotyl phenotype and high pigment content and helps the mutant recover from the genomes uncoupled (gun) phenotype. This indicates the assembly of functional phytochromes within these lines. Furthermore, our findings support the hypothesis that a mobile heme signal is involved in retrograde signaling from the chloroplast. Altogether, our work clarifies the molecular mechanism of HO1 TSS regulation and highlights the presence of a cytosolic bypass for heme catabolism in plant cells.