Domain of Unknown Function 966 (DUF966) gene family was found in the protein family database, which consisted of seven genes in rice. The proteins encoded by these genes contained one or two highly conserved DUF966 domains. The available data of public microarray databases implied that these genes might play crucial roles in plant response to abiotic stresses. In this study, a member of the DUF966 gene family, DUF966-stress repressive gene 2 in Oryza sativa (OsDSR2, Loc_Os01g62200), was cloned and its role in rice responding to salt and simulated drought stresses was functionally characterized. OsDSR2 was expressed mainly in nodes of stems and leaf blades from rice. Expression profile analysis of adversity showed that OsDSR2 had different transcriptional responses to salt, drought, cold, heat and oxidative (H2O2) stresses, as well as abscisic acid (ABA), methyl jasmonate, salicylic acid, gibberellin acid and auxin treatments. Transient expression demonstrated that OsDSR2 was localized in the membrane and nucleus. Overexpression of OsDSR2 could increase salt and simulated drought (polyethyleneglycol)-stress sensitivities in rice by downregulating the expression of ABA- and stress-responsive genes including OsNCED4, SNAC1, OsbZIP23, P5CS, Oslea3 and rab16C. Furthermore, OsDSR2-overexpressing plants showed reduced ABA sensitivity during the post-germination stage. These results suggested that OsDSR2 negatively regulated rice response to salt and simulated drought stresses as well as ABA signaling, which provided some useful data for understanding the functional roles of DUF966 family genes in abiotic stress responses in plants.