SEPALLATA (SEP) genes exhibit distinct patterns of expression and function in the grass species rice (Oryza sativa) and maize (Zea mays), suggesting that the role of the genes has changed during the evolution of the family. Here, we examine expression of the SEP-like gene LEAFY HULL STERILE1 (LHS1) in phylogenetically disparate grasses, reconstruct the pattern of gene expression evolution within the family, and then use the expression patterns to test hypotheses of gene function. Our data support a general role for LHS1 in specifying determinacy of the spikelet meristem and also in determining the identity of lemmas and paleas; these two functions are separable, as is the role of the gene in specifying floret meristems. We find no evidence that LHS1 determines flower number; it is strongly expressed in all spikelet meristems even as they are producing flowers, and expression is not correlated with eventual flower number. LHS1 expression in only the upper flowers of the spikelet appears to be the ancestral state; expression in all flowers is derived in subfamily Pooideae. LHS1 expression in pistils, stamens, and lodicules varies among the cereals. We hypothesize that LHS1 may have affected morphological diversification of grass inflorescences by mediating the expression of different floral identity genes in different regions of the floret and spikelet.