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Water stress (drought and waterlogging) leads to an imbalance in plant water distribution, disrupts cell homeostasis, and severely inhibits plant growth. Melatonin is a growth hormone that plants synthesise and has been shown to resist adversity in many plants. This review discusses the biosynthesis and metabolism of melatonin, as well as the changes in plant morphology and physiological mechanisms caused by the molecular defence process. Melatonin induces the expression of related genes in the process of plant photosynthesis under stress and protects the structural integrity of chloroplasts. Exogenous melatonin can maintain the dynamic balance of root ion exchange under waterlogging stress. Melatonin can repair mitochondria and alleviate damage caused by reactive oxygen species and reactive nitrogen species; and has a wide range of uses in the regulation of stress-specific genes and the activation of antioxidant enzyme genes. Melatonin improves the stability of membrane lipids in plant cells and maintains osmotic balance by regulating water channels. There is crosstalk between melatonin and other hormones, which jointly improve the ability of the root system to absorb water and breathe and promote plant growth. Briefly, as a multifunctional molecule, melatonin improves the tolerance of plants under water stress and promotes plant growth and development.