Abiotic stresses, such as drought and salinity, lead to crop growth damage and a decrease in crop yields. Stomata control CO2 uptake and optimize water use efficiency, thereby playing crucial roles in abiotic stress tolerance. Hydrogen peroxide (H2O2) is an important signal molecule that induces stomatal closure. However, the molecular pathway that regulates the H2O2 level in guard cells remains largely unknown. Here, we clone and characterize DST (drought and salt tolerance)—a previously unknown zinc finger transcription factor that negatively regulates stomatal closure by direct modulation of genes related to H2O2 homeostasis—and identify a novel pathway for the signal transduction of DST-mediated H2O2-induced stomatal closure. Loss of DST function increases stomatal closure and reduces stomatal density, consequently resulting in enhanced drought and salt tolerance in rice. These findings provide an interesting insight into the mechanism of stomata-regulated abiotic stress tolerance, and an important genetic engineering approach for improving abiotic stress tolerance in crops.