The identification of leaf wax genes involved in stress tolerance is expected to have great potential for crop improvement. Here we report the characterization of a novel AP2 domain-containing putative transcription factor gene from the model legume Medicago truncatula. The gene, designated WXP1, is able to activate wax production and confer drought tolerance in alfalfa (Medicago sativa), the most important forage legume species in the world and a close relative of M. truncatula. The predicted protein of WXP1 has 371 aa; it is one of the longest peptides of all the single AP2 domain proteins in M. truncatula. WXP1 is distinctly different from the most studied genes in the AP2/ERF transcription factor family such as AP2s, CBF/DREB1s, DREB2s, WIN1/SHN1 and GL15. Transcript level of WXP1 is inducible by cold, abscisic acid and drought treatment mainly in shoot tissues in M. truncatula. Overexpression of WXP1 under the control of the CaMV35S promoter led to a significant increase in cuticular wax loading on leaves of transgenic alfalfa. Scanning electron microscopy revealed earlier accumulation of wax crystals on the adaxial surface of newly expanded leaves and higher densities of wax crystalline structures on both adaxial and abaxial surfaces of mature leaves. Gas chromatography-mass spectrometry analysis revealed that total leaf wax accumulation per surface area increased 29.6-37.7% in the transgenic lines, and the increase was mainly contributed by C30 primary alcohol. WXP1 overexpression induced a number of wax-related genes. Transgenic leaves showed reduced water loss and chlorophyll leaching. Transgenic alfalfa plants with increased cuticular waxes showed enhanced drought tolerance demonstrated by delayed wilting after watering was ceased and quicker and better recovery when the dehydrated plants were re-watered.