We have functionally characterized an Arabidopsis (Arabidopsis thaliana) gene AtHSD1 (At5g50600) that encodes a protein with homology to animal 11-beta-hydroxysteroid dehydrogenase (HSD). Transgenic Arabidopsis plants overexpressing AtHSD1 (designated AOHSD plants) under the control of the cauliflower mosaic virus 35S promoter showed increased growth and seed yield as well as increased tolerance of saline stress and reduced seed dormancy. In canola (Brassica napus), transgenic plants overexpressing AtHSD1 also outgrew wild-type plants. AOHSD phenotypes were similar to those of plants that overproduced brassinosteroids (BRs) or overexpressed the BR receptor gene BRI1. A loss-of-function hsd mutant produced by RNA interference displayed a semi-dwarfed phenotype with reduced sensitivity to BRs. In contrast, AOHSD plants were hypersensitive to BRs and exhibited increased catabolism of abscisic acid (ABA). Germination of AOHSD seeds was less sensitive to ABA, while hsd seed was more sensitive to ABA during germination. AtHSD transcription was rapidly induced by BR treatment in wild type and was expressed widely in aerial plant parts, especially vascular tissues. This study demonstrates that AtHSD1 is involved in regulating growth and development in plants and is likely to promote or mediate BR effects. The gene has significant potential for improving growth and yield of canola and other agricultural crops.