Drought is one of the most important environmental constraints limiting plant growth and agricultural productivity. To understand the underlying mechanism of drought tolerance and to identify genes for improving this important trait, we conducted a gain-of-function genetic screen for improved drought tolerance in Arabidopsis thaliana. One mutant with improved drought tolerance was isolated and designated as enhanced drought tolerance1. The mutant has a more extensive root system than the wild type, with deeper roots and more lateral roots, and shows a reduced leaf stomatal density. The mutant had higher levels of abscisic acid and Pro than the wild type and demonstrated an increased resistance to oxidative stress and high levels of superoxide dismutase. Molecular genetic analysis and recapitulation experiments showed that the enhanced drought tolerance is caused by the activated expression of a T-DNA tagged gene that encodes a putative homeodomain-START transcription factor. Moreover, overexpressing the cDNA of the transcription factor in transgenic tobacco also conferred drought tolerance associated with improved root architecture and reduced leaf stomatal density. Therefore, we have revealed functions of the homeodomain-START factor that were gained upon altering its expression pattern by activation tagging and provide a key regulator that may be used to improve drought tolerance in plants.