Oshox22 belongs to the homeodomain-leucine zipper (HD-Zip) family I of transcription factors, most of which have unknown functions. Here we show that the expression of Oshox22 is strongly induced by salt stress, abscisic acid (ABA), and polyethylene glycol treatment (PEG), and weakly by cold stress. Trans-activation assays in yeast and transient expression analyses in rice protoplasts demonstrated that Oshox22 is able to bind the CAAT(G/C)ATTG element and acts as a transcriptional activator that requires both the HD and Zip domains. Rice plants homozygous for a T-DNA insertion in the promoter region of Oshox22 showed reduced Oshox22 expression and ABA content, decreased sensitivity to ABA, and enhanced tolerance to drought and salt stresses at the seedling stage. In contrast, transgenic rice over-expressing Oshox22 showed increased sensitivity to ABA, increased ABA content, and decreased drought and salt tolerances. Based on these results, we conclude that Oshox22 affects ABA biosynthesis and regulates drought and salt responses through ABA-mediated signal transduction pathways.