Perennial ryegrass (Lolium perenne L.), one of the main turfgrass species widely planted, is often subjected to drought and salt stresses due to its perennial nature and worldwide distribution. However, the molecular mechanisms and key genes involved in the adaptation of perennial ryegrass to these environmental stresses are largely unknown. Ycf3-interacting protein 1 (Y3IP1), an auxiliary factor of photosystem I (PSI), has recently been shown to enhance stress tolerance. However, the detailed mechanisms through which Y3IP1 enhances stress resistance remain poorly understood. In this study, we discovered that LpY3IP1 in perennial ryegrass positively regulates the drought and salt tolerance by protecting the photosynthetic apparatus under adverse conditions. Seedlings overexpressing LpY3IP1 exhibited improved photosynthetic performance and survival rates under drought and salt stresses, whereas RNAi lines were more vulnerable. Under drought and salt stresses, overexpression lines maintained higher levels of PSI core subunits, while the RNAi mutants showed a reduction in these subunits. LpY3IP1 promoted cyclic electron flow (CEF) at PSI and inhibited the accumulation of ROS under stress. Chloroplasts in RNAi lines were more disorganized and degraded, exhibiting shrunken structures, low staining vesicles, protrusions, and more unstacked and swollen thylakoids under drought or salt treatment. Nevertheless, these changes were less pronounced in the overexpression lines. Therefore, our results reveal that LpY3IP1 enhances the drought and salt tolerance of perennial ryegrass by promoting CEF and mitigating oxidative damage to chloroplasts under stressful conditions.