Abscisic acid (ABA) is a phytohormone critical for plant growth, development, and adaptation to various stress conditions. Plants have to adjust ABA levels constantly to respond to changing physiological and environmental conditions. To date, the mechanisms for fine-tuning ABA levels remain elusive. Here we report that AtBG1, a beta-glucosidase, hydrolyzes glucose-conjugated, biologically inactive ABA to produce active ABA. Loss of AtBG1 causes defective stomatal movement, early germination, abiotic stress-sensitive phenotypes, and lower ABA levels, whereas plants with ectopic AtBG1 accumulate higher ABA levels and display enhanced tolerance to abiotic stress. Dehydration rapidly induces polymerization of AtBG1, resulting in a 4-fold increase in enzymatic activity. Furthermore, diurnal increases in ABA levels are attributable to polymerization-mediated AtBG1 activation. We propose that the activation of inactive ABA pools by polymerized AtBG1 is a mechanism by which plants rapidly adjust ABA levels and respond to changing environmental cues.