Basic helix-loop-helix (bHLH) leucine-zipper transcription factors play important roles in abiotic stress responses. However, their specific roles in abiotic stress tolerance are not fully known. Here, we functionally characterized a bHLH gene, ThbHLH1, from Tamarix hispida in abiotic stress tolerance. ThbHLH1 specifically binds to G-box motif with the sequence of ‘CACGTG’. Transiently transfected T. hispida plantlets with transiently overexpressed ThbHLH1 and RNAi-silenced ThbHLH1 were generated for gain- and loss-of-function analysis. Transgenic Arabidopsis thaliana lines overexpressing ThbHLH1 were generated to confirm the gain- and loss-of-function analysis. Overexpression of ThbHLH1 significantly elevates glycine betaine and proline levels, increases Ca2+ concentration and enhances peroxidase (POD) and superoxide dismutase (SOD) activities to decrease reactive oxygen species (ROS) accumulation. Additionally, ThbHLH1 regulates the expression of the genes including P5CS, BADH, CaM, POD and SOD, to activate the above physiological changes, and also induces the expression of stress tolerance-related genes LEAs and HSPs. These data suggest that ThbHLH1 induces the expression of stress tolerance-related genes to improve abiotic stress tolerance by increasing osmotic potential, improving ROS scavenging capability and enhancing second messenger in stress signaling cascades.