Abiotic stresses such as salinity and drought have adverse effects on plants. In the present study, a Na(+)/H(+) antiporter gene homologue (LfNHX1) has been cloned from a local halophyte grass (Leptochloa fusca). The LfNHX1 cDNA contains an open reading frame of 1,623 bp that encodes a polypeptide chain of 540 amino acid residues. LfNHX1 protein sequence showed high similarity with NHX1 homologs reported from other halophyte plants. Amino acid and nucleotide sequence similarity, protein topology modeling and the presence of conserved functional domains in the LfNHX1 protein sequence classified it as a vacuolar NHX1 homolog. The overexpression of LfNHX1 gene under CaMV35S promoter conferred salt and drought tolerance in tobacco plants. Under drought stress, transgenic plants showed higher relative water contents, photosynthetic rate, stomatal conductance and membrane stability index as compared to wild type plants. More negative value of leaf osmotic potential was also observed in transgenic plants when compared with wild type control plants. Transgenic plants showed better germination and root growth at 2 mg L(-1) Basta herbicide and three levels (100, 200 and 250 mM) of sodium chloride. These results showed that LfNHX1 is a potential candidate gene for enhancing drought and salt tolerance in crops.