Peach latent mosaic viroid (PLMVd) is a chloroplast-replicating RNA that propagates in its natural host, peach (Prunus persica), as a complex mixture of variants, some of which are endowed with specific structural and pathogenic properties. This is the case of variant PC-C40, with an insertion of 12 to 13 nucleotides that folds into a hairpin capped by a U-rich loop, which is responsible for an albino-variegated phenotype known as peach calico (PC). We have applied a combination of ultrastructural, biochemical, and molecular approaches to dissect the pathogenic effects of PC-C40. Albino sectors of leaves infected with variant PC-C40 presented palisade cells that did not completely differentiate into a columnar layer and altered plastids with irregular shape and size and with rudimentary thylakoids, resembling proplastids. Furthermore, impaired processing and accumulation of plastid rRNAs and, consequently, of the plastid translation machinery was observed in the albino sectors of leaves infected with variant PC-C40 but not in the adjacent green areas or in leaves infected by mosaic-inducing or latent variants (including PC-C40Delta, in which the 12- to 13-nucleotide insertion was deleted). Protein gel blot and RT-PCR analyses showed that the altered plastids support the import of nucleus-encoded proteins, including a chloroplast RNA polymerase, the transcripts of which were detected. RNA gel blot and in situ hybridizations revealed that PLMVd replicates in the albino leaf sectors and that it can invade the shoot apical meristem and induce alterations in proplastids, bypassing the RNA surveillance system that restricts the entry of a nucleus-replicating viroid and most RNA viruses. Therefore, a non-protein-coding RNA with a specific structural motif can interfere with an early step of the chloroplast developmental program, leading ultimately to an albino-variegated phenotype resembling that of certain variegated mutants in which plastid rRNA maturation is also impaired. Our results highlight the potential of viroids for further dissection of RNA trafficking and pathogenesis in plants.