Improving stress tolerance and yield in crops are major goals for agriculture. Here, we show a new strategy to increase drought tolerance and yield in legumes by overexpressing trehalose-6-phosphate synthase in the symbiotic bacterium Rhizobium etli. Phaseolus vulgaris (common beans) plants inoculated with R. etli overexpressing trehalose-6-phosphate synthase gene had more nodules with increased nitrogenase activity and higher biomass compared with plants inoculated with wild-type R. etli. In contrast, plants inoculated with an R. etli mutant in trehalose-6-phosphate synthase gene had fewer nodules and less nitrogenase activity and biomass. Three-week-old plants subjected to drought stress fully recovered whereas plants inoculated with a wild-type or mutant strain wilted and died. The yield of bean plants inoculated with R. etli overexpressing trehalose-6-phosphate synthase gene and grown with constant irrigation increased more than 50%. Macroarray analysis of 7,200 expressed sequence tags from nodules of plants inoculated with the strain overexpressing trehalose-6-phosphate synthase gene revealed upregulation of genes involved in stress tolerance and carbon and nitrogen metabolism, suggesting a signaling mechanism for trehalose. Thus, trehalose metabolism in rhizobia is key for signaling plant growth, yield, and adaptation to abiotic stress, and its manipulation has a major agronomical impact on leguminous plants.