The ZFHD recognition sequence (ZFHDRS) and NAC recognition sequence (NACRS) play an important role in the dehydration-inducible expression of the Arabidopsis EARLY RESPONSIVE TO DEHYDRATION STRESS 1 (erd1) gene, which encodes a ClpA homologous protein. Using yeast one-hybrid system, we isolated a cDNA encoding ZFHD1 transcriptional activator that bind to the 62-bp promoter region of erd1, which contains the ZFHDRS. The ZFHD1 protein bound specifically to the ZFHDRS both in vitro and in vivo, and the expression of ZFHD1 gene was induced by drought, high salinity and ABA. Microarray analysis of transgenic plants overexpressing ZFHD1 revealed that several stress-inducible genes were upregulated in the transgenic plants, and the plants showed significantly increased drought stress tolerance. Moreover, cooverexpression of the ZFHD1 and NAC genes, whose products were shown to be able to interact using yeast two-hybrid system, activated expression of the erd1 gene in transgenic Arabidopsis plants under unstressed condition.