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Plants possess adaptive reprogramed modules to prolonged environmental stresses, including adjustment of metabolism and gene expression for physiological and morphological adaptation. <i>CCoAOMT1</i> encodes a caffeoyl CoA O-methyltransferase and is known to play an important role in adaptation of <i>Arabidopsis</i> plants to prolonged saline stress. In this study, we showed that the <i>CCoAOMT1</i> gene plays a role in drought stress response. Transcript of <i>CCoAOMT1</i> was induced by salt, dehydration (drought), and methyl viologen (MV), and loss of function mutants of <i>CCoAOMT1</i>, <i>ccoaomt1-1,</i> and <i>ccoaomt1-2</i> exhibit hypersensitive phenotypes to drought and MV stresses. The <i>ccoaomt1</i> mutants accumulated higher level of H₂O₂ in the leaves and expressed lower levels of drought-responsive genes including <i>RD29B</i>, <i>RD20</i>, <i>RD29A</i>, and <i>ERD1,</i> as well as <i>ABA3 3</i> and <i>NCED3</i> encoding ABA biosynthesis enzymes during drought stress compared to wild-type plants. A seed germination assay of <i>ccoaomt1</i> mutants in the presence of ABA also revealed that <i>CCoAOMT1</i> functions in ABA response. Our data suggests that <i>CCoAOMT1</i> plays a positive role in response to drought stress response by regulating H₂O₂ accumulation and ABA signaling.