Annexins are calcium-phospholipid binding proteins that play a significant role in the Ca2+signaling pathway. These proteins are essential for plants to effectively respond to abiotic stresses. However, their functions and mechanisms remain largely unknown in fungi. In this study, an annexin gene, Epann, was cloned from the lichenized fungus Endocarpon pusillum, a drought resistant organism. Our results showed that Epann was induced by several abiotic stresses in E. pusillum. Heterologous expression of the Epann gene enhanced the stress tolerance of Saccharomyces cerevisiae. Under heat-shock conditions, the EpANN proteins were significantly aggregated and the aggregation sites were located on peroxisomes. In heat-shocked cells, Epann reduced the reactive oxygen species level mainly through its intracellular peroxidase activity and regulation of stress-related genes. Transgenic Arabidopsis plants overexpressing Epann exhibited a higher germination rate under oxidative stress and stronger drought tolerance. Our results provide a mechanistic understanding of the role of annexins in abiotic stress responses and suggest that this lichenized fungal gene could be a promising resource to generate stress-tolerant transgenic organisms.