The phloem performs essential systemic functions in tracheophytes, yet little is known about its molecular genetic specification. Here we show that application of the peptide ligand CLAVATA3/EMBRYO SURROUNDING REGION 45 (CLE45) specifically inhibits specification of protophloem in Arabidopsis roots by locking the sieve element precursor cell in its preceding developmental state. CLE45 treatment, as well as viable transgenic expression of a weak CLE45(G6T) variant, interferes not only with commitment to sieve element fate but also with the formative sieve element precursor cell division that creates protophloem and metaphloem cell files. However, the absence of this division appears to be a secondary effect of discontinuous sieve element files and subsequent systemically reduced auxin signaling in the root meristem. In the absence of the formative sieve element precursor cell division, metaphloem identity is seemingly adopted by the normally procambial cell file instead, pointing to possibly independent positional cues for metaphloem formation. The protophloem formation and differentiation defects in brevis radix (brx) and octopus (ops) mutants are similar to those observed in transgenic seedlings with increased CLE45 activity and can be rescued by loss of function of a putative CLE45 receptor, BARELY ANY MERISTEM 3 (BAM3). Conversely, a dominant gain-of-function ops allele or mild OPS dosage increase suppresses brx defects and confers CLE45 resistance. Thus, our data suggest that delicate quantitative interplay between the opposing activities of BAM3-mediated CLE45 signals and OPS-dependent signals determines cellular commitment to protophloem sieve element fate, with OPS acting as a positive, quantitative master regulator of phloem fate.