Summary Drought, a primary abiotic stress, seriously affects plant growth and productivity. Stomata play a vital role in regulating gas exchange and drought adaptation. However, limited knowledge exists of the molecular mechanisms underlying stomatal movement in trees. Here, PeCHYR1, a ubiquitin E3 ligase, was isolated from Populus euphratica, a model of stress adaptation in forest trees. PeCHYR1 was preferentially expressed in young leaves and was significantly induced by ABA (abscisic acid) and dehydration treatments. To study the potential biological functions of PeCHYR1, transgenic poplar 84K (Populus alba × Populus glandulosa) plants overexpressing PeCHYR1 were generated. PeCHYR1 overexpression significantly enhanced H2O2 production and reduced stomatal aperture. Transgenic lines exhibited increased sensitivity to exogenous ABA and greater drought tolerance than that of WT (wild‐type) controls. Moreover, up‐regulation of PeCHYR1 promoted stomatal closure and decreased transpiration, resulting in strongly elevated WUE (water use efficiency). When exposed to drought stress, transgenic poplar maintained higher photosynthetic activity and biomass accumulation. Taken together, these results suggest that PeCHYR1 plays a crucial role in enhancing drought tolerance via ABA‐induced stomatal closure caused by hydrogen peroxide (H2O2) production in transgenic poplar plants.