The plant hormone auxin regulates many aspects of plant growth and development. Recent progress in Arabidopsis provided a scheme that auxin receptors, TIR1/AFBs, target transcriptional co-repressors, AUX/IAAs, for degradation, allowing ARFs to regulate transcription of auxin responsive genes. The mechanism of auxin-mediated transcriptional regulation is considered to have evolved around the time plants adapted to land. However, little is known about the role of auxin-mediated transcription in basal land plant lineages. We focused on the liverwort Marchantia polymorpha, which belongs to the earliest diverging lineage of land plants. M. polymorpha has only a single TIR1/AFB (MpTIR1), a single AUX/IAA (MpIAA), and three ARFs (MpARF1, MpARF2, and MpARF3) in the genome. Expression of a dominant allele of MpIAA with mutations in its putative degron sequence conferred an auxin resistant phenotype and repressed auxin-dependent expression of the auxin response reporter proGH3:GUS. We next established a system for DEX-inducible auxin-response repression by expressing the putatively stabilized MpIAA protein fused with the glucocorticoid receptor domain (MpIAAmDII-GR). Repression of auxin responses in proMpIAA:MpIAAmDII-GR plants caused severe defects in various developmental processes, including gemmaling development, dorsiventrality, organogenesis, and tropic responses. Transient transactivation assays showed that the three MpARFs had different transcriptional activities, each corresponding to their phylogenetic classifications. Moreover, MpIAA and MpARF proteins interacted with each other with different affinities. This study provides evidence that pleiotropic auxin responses can be achieved by a minimal set of auxin signaling factors and suggests that the transcriptional regulation mediated by TIR1/AFB, AUX/IAA, and three types of ARFs might have been a key invention to establish body plans of land plants. We propose that M. polymorpha is a good model to investigate the principles and the evolution of auxin-mediated transcriptional regulation and its roles in land plant morphogenesis.