The plant hormone abscisic acid (ABA) plays a wide range of important roles in plant growth and development, including embryogenesis, seed dormancy, root and shoot growth, transpiration, and stress tolerance. ABA and various abiotic stresses also activate the expression of numerous plant genes through undefined signaling pathways. To gain insight into ABA and stress signal transduction, we conducted a genetic screen based on ABA- and stress-inducible gene transcription. Here we report the identification of an Arabidopsis mutation, fiery1 (fry1), which results in super-induction of ABA- and stress-responsive genes. Seed germination and postembryonic development of fry1 are more sensitive to ABA or stress inhibition. The mutant plants are also compromised in tolerance to freezing, drought, and salt stresses. Map-based cloning revealed that FRY1 encodes an inositol polyphosphate 1-phosphatase, which functions in the catabolism of inositol 1, 4, 5-trisphosphate (IP(3)). Upon ABA treatment, fry1 mutant plants accumulated more IP(3) than did the wild-type plants. These results provide the first genetic evidence indicating that phosphoinositols mediate ABA and stress signal transduction in plants and their turnover is critical for attenuating ABA and stress signaling.