Transcription factors (TFs), microRNAs (miRNAs), small interfering RNAs (siRNAs) and other functional non-coding small RNAs (sRNAs) are important gene regulators. Comparison of sRNA expression profiles between transgenic barley over-expressing a drought tolerant TF (TaDREB3) and non-transgenic control barley revealed many group-specific sRNAs. In addition, 42% of the shared sRNAs were differentially expressed between the two groups (|log(2)| >1). Furthermore, TaDREB3-derived sRNAs were only detected in transgenic barley despite the existence of homologous genes in non-transgenic barley. These results demonstrate that the TF strongly affects the expression of sRNAs and siRNAs could in turn affect the TF stability. The TF also affects size distribution and abundance of sRNAs including miRNAs. About half of the sRNAs in each group were derived from chloroplast. A sRNA derived from tRNA-His(GUG) encoded by the chloroplast genome is the most abundant sRNA, accounting for 42.2% of the total sRNAs in transgenic barley and 28.9% in non-transgenic barley. This sRNA, which targets a gene (TC245676) involved in biological processes, was only present in barley leaves but not roots. 124 and 136 miRNAs were detected in transgenic and non-transgenic barley, respectively. miR156 was the most abundant miRNA and up-regulated in transgenic barley, while miR168 was the most abundant miRNA and up-regulated in non-transgenic barley. Eight out of 20 predicted novel miRNAs were differentially expressed between the two groups. All the predicted novel miRNA targets were validated using a degradome library. Our data provide an insight into the effect of TF on the expression of sRNAs in barley.