The invention relates to a panicle size controlling gene SSP1 (Small and Sheathed Panicle 1) and a mutant gene ssp1 thereof, and action mechanism thereof in regulating plant height, leaf included angle and panicle size, and provides a gene sequence SEQ IDNO: 3 from the panicle size controlling gene mutant ssp1. The invention also relates to homologous genes of the panicle size controlling gene mutant ssp1 in barley, wheat, maize, corn, sorghum, soybean, cotton, rape, arabidopsis and other plants. The above mentioned genes are all referred to as panicle size controlling genes. The invention also relates to applications of the SSP1 gene and the mutant ssp1 gene in controlling plant height, improving lodging resistance, reducing leaf angle to improve photosynthetic efficiency, changing gibberellin response, suppressing panicle sprouting and breeding.