A cDNA from Arabidopsis corresponding to a new cold-inducible gene, RCI3 (for Rare Cold Inducible gene 3), was isolated. Isoelectric focusing electrophoresis and staining of peroxidase activity demonstrated that RCI3 encodes an active cationic peroxidase. RNA-blot analysis revealed that RCI3 expression in response to low temperature is negatively regulated by light, as RCI3 transcripts were exclusively detected in etiolated seedlings and roots of adult plants. RCI3 expression was also induced in etiolated seedlings, but not in roots, exposed to dehydration, salt stress or ABA, indicating that it is subjected to a complex regulation through different signaling pathways. Analysis of transgenic plants containing RCI3::GUS fusions established that this regulation occurs at the transcriptional level during plant development, and that cold-induced RCI3 expression in roots is mainly restricted to the endodermis. Plants overexpressing RCI3 showed an increase in dehydration and salt tolerance, while antisense suppression of RCI3 expression gave dehydration- and salt-sensitive phenotypes. These results indicate that RCI3 is involved in the tolerance to both stresses in Arabidopsis, and illustrate that manipulation of RCI3 has a potential with regard to plant improvement of stress tolerance.