Prolonged drought is a major challenge in plant growth, severely affecting development and yield. Enhancing drought tolerance is thus a highly desired goal for agriculture. Here, we report that the loss-of-function of two drought-induced genes, GASA3 and AFP1, significantly enhances drought tolerance in Arabidopsis thaliana. While constitutive expression of GASA3 and AFP1 increased drought sensitivity compared to wild type (WT) plants, a gasa3afp1 double mutant exhibited superior drought tolerance compared to the single mutants. Enhanced drought tolerance of gasa3, afp1 and gasa3afp1 is likely due to reduced water loss caused by smaller stomatal apertures and thus lower transpiration rates. Moreover, gasa3 and afp1 mutants accumulated higher levels of abscisic acid (ABA) under drought conditions than WT plants, concomitant with a stronger up-regulation of ABA-responsive genes such as RD29A/B, ABF2/3, and ABI5. The stronger ABA increase in the mutants seems to result from hydrolysis of abscisic acid-glucosyl ester (ABA-GE) from vacuolar stores via the {beta}-glucosidase BG2 rather than by de-novo biosynthesis. Promoter analysis revealed the presence of ABA-responsive and drought stress-related cis-acting elements within the GASA3 and AFP1 promoter regions. RT-qPCR confirmed that the expression of both genes increased under drought. However, GASA3 induction was significantly reduced in the absence of AFP1, suggesting that AFP1 is involved in the modulation of GASA3 expression. Our findings identify a novel AFP1/GASA3-driven control circuit that negatively regulates drought tolerance by suppressing stomatal closure and attenuating ABA signalling.