GDSL lipase (GLIP) plays a pivotal role in plant cell growth as a multifunctional hydrolytic enzyme. Herein, a cotton (Gossypium hirsutum L. cv Xuzhou 142) GDSL lipase gene (GhGLIP) was obtained from developing ovules and fibers. The GhGLIP cDNA contained an open reading frame (ORF) of 1,143 base pairs (bp) and encodes a putative polypeptide of 380 amino acid residues. Sequence alignment indicated that GhGLIP includes four enzyme catalytic amino acid residue sites of Ser (S), Gly (G), Asn (N) and His (H), located in four conserved blocks. Phylogenetic tree analysis showed that GhGLIP belongs to the typical class IV lipase family with potential functions in plant secondary metabolism. Subcellular distribution analysis demonstrated that GhGLIP localized to the nucleus, cytoplasm and plasma membrane. GhGLIP was expressed predominantly at 5-15 day post anthesis (dpa) in developing ovules and elongating fibers, measured as mRNA levels and enzyme activity. Ectopic overexpression of GhGLIP in Arabidopsis plants resulted in enhanced seed development, including length and fresh weight. Meanwhile, there was increased soluble sugar and protein storage in transgenic Arabidopsis plants, coupled with the promotion of lipase activity. Moreover, the expression of cotton GhGLIP is induced by ethylene (ETH) treatment in vitro. A 1,954-bp GhGLIP promoter was isolated and expressed high activity in driving green fluorescence protein (GFP) expression in tobacco leaves. Cis-acting element analysis of the GhGLIP promoter (pGhGLIP) indicated the presence of an ethylene-responsive element (ERE), and transgenic tobacco leaves with ectopic expression of pGhGLIP::GFP-GUS showed increased GUS activity after ETH treatment. In summary, these results suggest that GhGLIP is a functional enzyme involved in ovule and fiber development and performs significant roles in seed development.