NAC proteins are plant-specific transcriptional regulators. ATAF1 was one of the first identified NAC proteins in Arabidopsis. In present study, we characterized the ATAF1 expression and biological function in response to water deficit stress. ATAF1 mRNA expression was strongly induced by dehydration and abscisic acid (ABA) treatment, but inhibited by water treatment, suggesting a general role in drought stress responses. Transient expression analysis in onion epidermal cells indicated the nuclear localization for the ATAF1::GFP fusion protein. Yeast transactivation analysis showed that ATAF1 had ability to activate reporter gene expression. Furthermore, domain deletion analysis revealed that the ATAF1 transactivation activity was conferred by its C-terminal domain. When ATAF1 gene was knocked out by T-DNA insertions, Arabidopsis ataf1-1 and ataf1-2 mutants displayed a recovery rate about seven times higher than wild-type plants in drought response test. This ataf1 phenotype was coincident with the enhanced expression of stress responsive marker genes, such as COR47, ERD10, KIN1, RD22 and RD29A under drought stress. Above evidences suggest that ATAF1, as a transcriptional regulator, negatively regulates the expression of stress responsive genes under drought stress in Arabidopsis.