Carotenoids have essential roles in light-harvesting processes and protecting the photosynthetic machinery from photo-oxidative damage. Phytoene synthase (PSY) and Orange (Or) are key plant proteins for carotenoid biosynthesis and accumulation. We previously isolated the sweetpotato (Ipomoea batatas) Or gene (IbOr), which is involved in carotenoid accumulation and salt stress tolerance. The molecular mechanism underlying IbOr regulation of carotenoid accumulation was unknown. Here, we show that IbOr has an essential role in regulating IbPSY stability via its holdase chaperone activity both in vitro and in vivo. This protection results in carotenoid accumulation and abiotic stress tolerance. IbOr transcript levels increase in sweetpotato stem, root, and calli after exposure to heat stress. IbOr is localized in the nucleus and chloroplasts, but interacts with IbPSY only in chloroplasts. After exposure to heat stress, IbOr predominantly localizes in chloroplasts. IbOr overexpression in transgenic sweetpotato and Arabidopsis conferred enhanced tolerance to heat and oxidative stress. These results indicate that IbOr holdase chaperone activity protects IbPSY stability, which leads to carotenoid accumulation, and confers enhanced heat and oxidative stress tolerance in plants. This study provides evidence that IbOr functions as a molecular chaperone, and suggests a novel mechanism regulating carotenoid accumulation and stress tolerance in plants.