Functional genomic elements, including transposable elements, small RNAs and non-coding RNAs, are involved in regulation of gene expression in response to plant stress. To identify genomic elements that regulate dehydration and alkaline tolerance in Boea hygrometrica, a resurrection plant that inhabits drought and alkaline Karst areas, a genomic DNA library from B. hygrometrica was constructed and subsequently transformed into Arabidopsis using binary bacterial artificial chromosome (BIBAC) vectors. Transgenic lines were screened under osmotic and alkaline conditions, leading to the identification of Clone L1-4 that conferred osmotic and alkaline tolerance. Sequence analyses revealed that L1-4 contained a 49-kb retroelement fragment from B. hygrometrica, of which only a truncated sequence was present in L1-4 transgenic Arabidopsis plants. Additional subcloning revealed that activity resided in a 2-kb sequence, designated Osmotic and Alkaline Resistance 1 (OAR1). In addition, transgenic Arabidopsis lines carrying an OAR1-homologue also showed similar stress tolerance phenotypes. Physiological and molecular analyses demonstrated that OAR1-transgenic plants exhibited improved photochemical efficiency and membrane integrity and biomarker gene expression under both osmotic and alkaline stresses. Short transcripts that originated from OAR1 were increased under stress conditions in both B. hygrometrica and Arabidopsis carrying OAR1. The relative copy number of OAR1 was stable in transgenic Arabidopsis under stress but increased in B. hygrometrica. Taken together, our results indicated a potential role of OAR1 element in plant tolerance to osmotic and alkaline stresses, and verified the feasibility of the BIBAC transformation technique to identify functional genomic elements from physiological model species.