Homeodomain-leucine zipper (HD-Zip) proteins are putative transcription factors encoded by a class of recently discovered homeobox genes as yet found only in plants. This paper reports on the characterization of one of these genes, ATHB-7, in Arabidopsis thaliana. ATHB-7 transcripts were present in all organs of the plant at low levels, but expression was induced several-fold by water deficit, osmotic stress as well as by exogenous treatment with abscisic acid (ABA), a response being detectable at 10(-8) M and reaching a maximum at 10(-6) M ABA. The ATHB-7 transcript was detected within 30 min after treatment with ABA and the transcript level was rapidly reduced after removal of the hormone. The induction of ATHB-7 was shown to be mediated strictly via ABA, since no induction of ATHB-7 was detectable in the ABA-deficient mutant aba-3 subjected to drought treatment. Induction levels in two ABA-insensitive mutants abi2 and abi3 were similar to the wild-type response. In the abi1 mutant, however, induction was impaired as 100-fold higher concentrations of ABA were required for a maximum induction as compared with wild-type. In this mutant the ATHB-7 response was reduced also after drought and osmotic stress treatments. These results indicate that ATHB-7 is transcriptionally regulated in an ABA-dependent manner and may act in a signal transduction pathway which mediates a drought response and also includes ABI1.