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Dehydration-responsive element binding/C-repeat-binding factors (DREB/CBF) control the activity of multiple stress response genes and therefore represent attractive targets for genetic improvement of abiotic stress tolerance. Paper mulberry (Broussonetia papyrifera L. Vent) is well known for its bark fibers and high levels of chalcone and flavonoid derivatives. Transgenic paper mulberry plants expressing a tall fescue (Festuca arundinacea Schreb.) FaDREB1 gene under the control of CaMV 35S were produced to examine the potential utility of FaDREB1 to increase the tolerance of paper mulberry plants to abiotic stress. The overexpressing FaDREB1 plants showed higher salt and drought tolerance than the wild-type plants (WT). After 13 days of withholding water, or 15 days in the presence of 250 mM NaCl, all the WT plants died, while the over-expressing FaDREB1 plants survived. The FaDREB1 plants had higher leaf water and leaf chlorophyll contents, accumulated more proline and soluble sugars, and had less ion leakage (which reflects membrane damage) than the WT plants had under high salt- and water-deficient conditions. The 35S promoter-driven expression of FaDREB1 did not cause growth retardation under normal growth conditions. Therefore, improved tolerance to multiple environmental stresses in paper mulberry might be achieved via genetic engineering through the ectopic expression of an FaDREB1 gene.