ABSTRACT Phytoene synthase (PSY) is the rate-limiting enzyme for carotenoid biosynthesis. To date, several studies focused on PSY genes in the context of abiotic stress responses. In this study, two phytoene synthase encoding genes, IbPSY1 and IbPSY2, were identified from a published transcriptome and bioinformatic analysis showed that they shared conserved domains with phytoene synthases from other plants. The IbPSY1 gene was cloned and carefully characterized. Digital gene expression profiling (DGE) showed that the highest transcription level of IbPSY1 was in young leaves, and the lowest level was in stems. In vivo expression levels of IbPSY1 under abiotic stress were observed to be highest in stems at day 11. Over-expression of IbPSY1 in Escherichia coli and yeast cells endowed the cells with better growth under salt and drought stress than the control cells. This study demonstrated that IbPSY1 not only played an important role in vivo, but also in E. coli and yeast to improve tolerance to salinity and drought stress. Thus, IbPSY1 may be aid in the development of transgenic plants with enhanced stress tolerance.