To understand the role of small GTPases in response to abiotic stress, we isolated a gene encoding a small GTPase, designated MfARL1, from a subtracted cDNA library in Medicago falcata, a native legume species in semi-arid grassland in northern China. The function of MfARL1 in response to salt stress was studied by expressing MfARL1 in Arabidopsis. Wild-type (WT) and transgenic plants constitutively expressing MfARL1 showed comparable phenotype when grown under control conditions. Germination of seeds expressing MfARL1 was less suppressed by salt stress than that of WT seeds. Transgenic seedlings had higher survival rate than WT seedlings under salt stress, suggesting that expression of MfARL1 confers tolerance to salt stress. The physiological and molecular mechanisms underlying these phenomena were elucidated. Salt stress led to a significant decrease in chlorophyll contents in WT plants, but not in transgenic plants. Transgenic plants accumulated less amounts of H₂O₂ and malondialdehyde than their WT counterparts under salt stress, which can be accounted for by the higher catalase activities, lower activities of superoxide dismutase, and peroxidase in transgenic plants than in WT plants. Transgenic plants displayed lower Na⁺/K⁺ ratio due to less accumulation of Na⁺ than wild-type under salt stress conditions. The lower Na⁺/K⁺ ratio may result from less accumulation of Na⁺ due to reduced expression of AtHKT1 that encodes Na⁺ transporter in transgenic plants under salt stress. These findings demonstrate that MfARL1 encodes a novel stress-responsive small GTPase that is involved in tolerance to salt stress.