Drought is one of the key threatening environmental factors for plant and agriculture. Phenylalanine ammonia lyase (PAL) is a key enzyme involved in plant defense against abiotic stress, however, the role of PAL in drought tolerance remains elusive. Here, a PAL member (FuPAL1) containing noncanonical Ala-Ser-Gly triad was isolated from Fritillaria unibracteata, one important alpine pharmaceutical plant. FuPAL1, mainly distributed in cytosol, was more conserved than FuCOMT and FuCHI at both nucleotide and amino acid levels. FuPAL1 was overexpressed in Escherichia coli and the purified recombinant FuPAL1 protein showed catalytic preference on L-Phe than L-Tyr. Homology modeling and site-mutation of FuPAL1 exhibited FuPAL1 took part in the ammonization process by forming MIO-like group, and Phe141, Ser208, Ileu218 and Glu490 played key roles in substrate binding and (or) catalysis. HPLC analysis showed that lignin and salicylic acid levels increased but total flavonoid levels decreased in FuPAL1 transgenic Arabidopsis compared to wild-type plants. Moreover, FuPAL1 transgenic Arabidopsis significantly enhanced its drought tolerance, which suggested that FuPAL1 mediated tolerance to drought by inducing the biosynthesis and accumulation of salicylic acid and lignin. Taken together, our results confirmed that the FuPAL1 played an important role in drought tolerance, and FuPAL1 might be a valuable target for genetic improvement of drought resistance in future.