Myo-inositol participates in many different aspects of plant physiology and myo-inositol 1-phosphate synthase (MIPS; EC 5.5.1.4) catalyzes the rate limiting step of inositol biosynthetic pathway. Chickpea (Cicer arietinum), a drought-tolerant leguminous crop plant, is known to accumulate increased inositol during dehydration stress. Previously, we reported two differentially expressed divergent genes (CaMIPS1 and CaMIPS2) encoding two MIPS isoforms in chickpea. In this communication, we demonstrated that CaMIPS2 is an early dehydration-responsive gene and is also rapidly induced by exogenous ABA application, while CaMIPS1 expression is not much influenced by dehydration or ABA. The regulation of expression of these two genes has been studied by examining their promoter activity through GUS reporter gene and differential promoter activity has been observed. Moreover, unlike CaMIPS1 promoter, CaMIPS2 promoter contains CRT/DRE cis-regulatory element which seems to play a key role in dehydration-induced expression of CaMIPS2. Furthermore, CaMIPS1 and CaMIPS2 have been successfully complemented and shown to repair the defect of seedling growth and altered seed phenotype of Atmips1 mutant. Moreover, Arabidopsis transgenic plants overexpressing CaMIPS1 or CaMIPS2 exhibit improved tolerance to salinity and dehydration stresses and such tolerance of transgenic plants is correlated with their elevated level of inositol. Remarkably, CaMIPS2 transgenic lines perform better in all attributes than CaMIPS1 transformants under such stress conditions, due to comparatively unabated production of inositol by CaMIPS2 enzyme, as this enzyme retains significant activity under stress conditions.