Abscisic acid (ABA) is an important regulator of plant responses to environmental stresses and an absolute requirement for stress tolerance. Recently, a third phytoene synthase (PSY3) gene paralog was identified in monocots and demonstrated to play a specialized role in stress-induced ABA formation, thus suggesting that the first committed step in carotenogenesis is a key limiting step in ABA biosynthesis. To examine whether the ectopic expression of PSY, other than PSY3, would similarly affect ABA level and stress tolerance, we have produced transgenic tobacco containing a fruit-specific PSY (CpPSY) of grapefruit (Citrus paradisi Macf.). The transgenic plants contained a single- or double-locus insertion and expressed CpPSY at varying transcript levels. In comparison with the wild-type plants, the CpPSY expressing transgenic plants showed a significant increase on root length and shoot biomass under PEG-, NaCl- and mannitol-induced osmotic stress. The enhanced stress tolerance of transgenic plants was correlated with the increased endogenous ABA level and expression of stress-responsive genes, which in turn was correlated with the CpPSY copy number and expression level in different transgenic lines. Collectively, these results provide further evidence that PSY is a key enzyme regulating ABA biosynthesis and that the altered expression of other PSYs in transgenic plants may provide a similar function to that of the monocot's PSY3 in ABA biosynthesis and stress tolerance. The results also pave the way for further use of CpPSY, as well as other PSYs, as potential candidate genes for engineering tolerance to drought and salt stress in crop plants.