Abscisic acid (ABA) is a key regulator of plant development and stress tolerance. Here we report functional validation of the ABA receptor OsPYL6 by constitutive and stress-inducible overexpression and RNAi silencing, in an indica rice cultivar 'Pusa Sugandh 2'. Overexpression of OsPYL6 conferred ABA hypersensitivity during germination and promoted total root length. Overexpression and RNAi silencing of OsPYL6 resulted in enhanced accumulation of ABA in seedlings under non-stress conditions, at least, in part through up-regulation of different 9-cis epoxycarotenoid dioxygenase (NCED )genes. This suggests that PYL6 expression is crucial for ABA homeostasis. Analysis of drought tolerance of OsPYL6 transgenic and wild type plants showed that OsPYL6 overexpression enhanced the expression of stress-responsive genes and dehydration tolerance. Transgenic rice plants overexpressing OsPYL6 with AtRD29A (Arabidopsis thaliana Responsive to Dehydration 29A) promoter also exhibited about 25% less whole plant transpiration, compared with wild type plants under drought, confirming its role in activation of dehydration avoidance mechanisms. However, overexpression of PYL6 reduced grain yield under non-stress conditions due to reduction in height, biomass, panicle branching and spikelet fertility. RNAi silencing of OsPYL6 also reduced grain yield under drought. These results showed that rice OsPYL6 is a key regulator of plant development and drought tolerance, and fine-tuning of its expression is critical for improving yield and stress tolerance.