Highlights • OsDhn-Rab16D harbouring over-expressed lines imparts tolerance under PEG and drought stress. • Over-expressing lines experiences higher lignification and catalase activity to maintain water balance and cell homeostasis, respectively. • OsDhn-Rab16D showed nuclear as well as cytoplasmic sub cellular localization. • OsDhn-Rab16D over-expressing lines modulate the expression pattern of ABA signaling and stress-responsive genes. • A novel protein complex OsFKBP-OsDhn-Rab16D was identified, which may be associated with ABA signaling to provide drought stress tolerance. Abstract Dehydrins (DHNs) have been reported to act as chaperones to combat drought stress. While in this study, we explored a novel nuclear complex of Oryza sativa FKBP and YSK2-type dehydrin (OsDhn-Rab16D), associated with ABA signaling to impart drought stress tolerance. The transcript levels of OsDhn-Rab16D in rice seedlings were induced in response to drought, abscisic acid (ABA) and H 2 O 2 exposure. Ectopic expression of OsDhn-Rab16D transgenic lines showed enhanced tolerance to both osmotic stresses caused by PEG and drought. Using the yeast two-hybrid (Y2H) assay , O. sativa FKBP (a prolyl cis-trans isomerase) was identified as an interacting partner of OsDhn-Rab16D. Fluorescence signals between OsDhn-Rab16D and OsFKBP were observed in the nucleus. The pull-down assay confirmed the physical interaction between OsDhn-Rab16D and OsFKBP. qRT-PCR of drought and ABA-responsive gene reveals the higher transcript abundance in PEG-treated transgenic lines. Moreover, under drought conditions, transgenic lines maintain membrane integrity and increase the lignification in adventitious rice roots due to the higher expression level of catalase and lignin biosynthesis enzyme, respectively, as compared with wild-type. Overall, our findings suggest that OsDhn-Rab16D and OsFKBP complex involved in ABA-responsive drought stress signaling in rice and probably act as a positive transcriptional co-regulator, in addition, to act as chaperones. [ABSTRACT FROM AUTHOR]