AtSAP5, one of approximately 14 members of the Stress Associated Protein gene family in Arabidopsis, was identified by its expression in response to salinity, osmotic, drought and cold stress. AtSAP5 shows strong homology to OSISAP1, an A20/AN1-type zinc finger protein implicated in stress tolerance in rice. To evaluate the function of AtSAP5 in the regulation of abiotic stress responses, transgenic Arabidopsis plants that over-express AtSAP5 (35S::AtSAP5) were characterized, along with wild-type and T-DNA knock-down plants. Plants that over-express AtSAP5 showed increased tolerance to environmental challenges including salt stress, osmotic stress and water deficit. Comparison of gene expression patterns between 35S::AtSAP5 transgenic plants and wild-type plants under normal conditions and water deficit stress indicated that over-expression of AtSAP5 correlates with up-regulation of drought stress responsive gene expression. Analysis of transgenic plants that express GFP-AtSAP5 showed that it is localized primarily in nuclei of root cells and recombinant AtSAP5 has E3 ubiquitin ligase activity in vitro. These results indicate that AtSAP5 has E3 ligase activity and acts as a positive regulator of stress responses in Arabidopsis.