Monoterpenoids are the main components of Mentha canadensis essential oil. Monoterpene biosynthetic pathways have been explored, but the regulatory mechanisms remain unclarified. We identified an abscisic acid (ABA)-inducible A-type basic leucine zipper (bZIP) transcription factor McbZIP1 that was localized in the nucleus and positively regulates monoterpene synthesis. McbZIP1 was expressed in most M. canadensis tissues and was induced under ABA, mannitol, and NaCl treatments. McbZIP1 had transcriptional activity in yeast and the N terminus (amino acids 75–117) was sufficient for transactivation. Yeast one-hybrid and Dual-Luciferase assays showed that McbZIP1 binds to ABA-responsive elements in the promoter region of limonene synthase gene. Yeast two-hybrid and biomolecular fluorescence complementation assays revealed that McbZIP1 interacts with McSnRK2.4. Overexpression of McbZIP1 in peppermint resulted in dramatically up-regulated monoterpene biosynthesis gene levels and increased menthol contents. The results support a transcriptional regulation mechanism in which McbZIP1 serves as a positive regulator of menthol biogenesis. These findings contribute to the molecular mechanism of monoterpenoid biogenesis, which may have uses in genetic engineering and menthol production.