Nitrogen is an essential nutrient for plant growth and development, and plays vital roles in crop yield. Assimilation of nitrogen is thus fine-tuned in response to heterogeneous environments. However, the regulatory mechanism underlying this essential process remains largely unknown. Here, we report that a zinc-finger transcription factor, drought and salt tolerance (DST), controls nitrate assimilation in rice by regulating the expression of OsNR1.2. We found that loss of function of DST results in a significant decrease of nitrogen use efficiency (NUE) in the presence of nitrate. Further study revealed that DST is required for full nitrate reductase activity in rice and directly regulates the expression of OsNR1.2, a gene showing sequence similarity to nitrate reductase. Reverse genetics and biochemistry studies revealed that OsNR1.2 encodes an NADH-dependent nitrate reductase that is required for high NUE of rice. Interestingly, the DST-OsNR1.2 regulatory module is involved in the suppression of nitrate assimilation under drought stress, which contributes to drought tolerance. Considering the negative role of DST in stomata closure, as revealed previously, the positive role of DST in nitrogen assimilation suggests a mechanism coupling nitrogen metabolism and stomata movement. The discovery of this coupling mechanism will aid the engineering of drought-tolerant crops with high NUE in the future.