Drought stress conditions in soil or air hinder plant growth and development. Here, we report that the hot pepper (C apsicum a nnuum) RING type E3 Ligase 1 gene (CaREL1) is essential to the drought stress response. CaREL1 encodes a cytoplasmic- and nuclear-localized protein with E3 ligase activity. CaREL1 expression was induced by abscisic acid (ABA) and drought. CaREL1 contains a C3H2C3-type RING finger motif, which functions in ubiquitination of the target protein. We used CaREL1-silenced pepper plants and CaREL1-overexpressing (OX) transgenic Arabidopsis plants to evaluate the in vivo function of CaREL1 in response to drought stress and ABA treatment. CaREL1-silenced pepper plants displayed a drought-tolerant phenotype characterized by ABA hypersensitivity. In contrast, CaREL1-OX plants exhibited ABA hyposensitivity during the germination, seedling, and adult stages. In addition, plant growth was severely impaired under drought stress conditions, via a high level of transpirational water loss and decreased stomatal closure. Quantitative RT-PCR analyses revealed that ABA-related drought stress responsive genes were more weakly expressed in CaREL1-OX plants than in wild-type plants, indicating that CaREL1 functions in the drought stress response via the ABA-signalling pathway. Taken together, our results indicate that CaREL1 functions as a negative regulator of ABA-mediated drought stress tolerance.