Dehydration-responsive element-binding (DREB) proteins are important transcription factors in plant stress responses and signal transduction. Based on high-throughput sequencing results, a new cDNA sequence encoding an LcDREB3a transcription factor from the drought-resistant forage grass, Leymus chinensis, was isolated by RACE PCR. Sequence similarity analysis indicates that the gene product is active in the ABA-responsive pathway, and real-time PCR-based expression analysis shows the transcript accumulates in response to a variety of stress treatments. These results indicate that LcDREB3a is involved in both ABA-dependent and -independent signal transduction in the stress-responsive process of L. chinensis. The identity of the gene product as a DREB transcription factor is supported by observations of its nuclear localization when transiently expressed as a GFP fusion in onion epidermal cells. Furthermore, LcDREB3a is able to activate reporter gene expression, and the protein is shown to specifically bind to the conserved DRE element in a yeast one-hybrid assay. The transgenic expression of LcDREB3a in Arabidopsis causes no growth retardation and induces the increased expression of stress tolerance genes compared to control, resulting in improved drought and salt stress tolerance. Thus, LcDREB3a, encoding a stress-inducible DREB transcription factor, could enhance the abiotic stress tolerance of plants.