Summary A key question in plant biology is how oriented cell divisions are integrated with patterning mechanisms to generate organs with adequate cell type allocation. In the root vasculature, a miRNA gradient controls the abundance of HD-ZIP III transcription factors, which in turn control cell fate and spatially restrict vascular cell proliferation to specific cells. Here, we show that a functional miRNA gradient requires an opposing gradient of ARGONAUTE10, which sequesters miRNAs to protect HD-ZIP III transcripts from degradation. In the absence of ARGONAUTE10, xylem precursor cells undergo periclinal divisions that lead to continuous strands of differentiated xylem elements at ectopic positions. Notably, periclinal daughter cells maintain xylem identity even when they are located outside of the xylem axis, resulting in disrupted tissue boundaries. We further demonstrate that ARGONAUTE10 and HD-ZIP IIIs buffer cytokinin signalling to control formative cell divisions, providing a framework for integration of phytohormone and miRNA-mediated patterning.