Several plant species require microbial associations for survival under different biotic and abiotic stresses. In this study, we show that Enterobacter sp. SA187, a desert plant endophytic bacterium, enhances yield of the crop plant alfalfa under field conditions as well as growth of the model plant Arabidopsis thaliana in vitro, revealing a high potential of SA187 as a biological solution for improving crop production. Studying the SA187 interaction with Arabidopsis, we uncovered a number of mechanisms related to the beneficial association of SA187 with plants. SA187 colonizes both the surface and inner tissues of Arabidopsis roots and shoots. SA187 induces salt stress tolerance by production of bacterial 2-keto-4-methylthiobutyric acid (KMBA), known to be converted into ethylene. By transcriptomic, genetic and pharmacological analyses, we show that the ethylene signaling pathway, but not plant ethylene production, is required for KMBA-induced plant salt stress tolerance. These results reveal a novel molecular communication process during the beneficial microbe-induced plant stress tolerance.