Mutation of the AM1 gene causes an albino midrib phenotype and enhances tolerance to drought in rice K(+) efflux antiporter (KEA) genes encode putative potassium efflux antiporters that are mainly located in plastid-containing organisms, ranging from lower green algae to higher flowering plants. However, little genetic evidence has been provided on the functions of KEA in chloroplast development. In this study, we isolated a rice mutant, albino midrib 1 (am1), with green- and white-variegation in the first few leaves, and albino midrib phenotype in older tissues. We found that AM1 encoded a putative KEA in chloroplast. AM1 was highly expressed in leaves, while lowly in roots. Chloroplast gene expression and proteins accumulation were affected during chlorophyll biosynthesis and photosynthesis in am1 mutants. Interestingly, AM1 was induced by salt and PEG, and am1 showed enhanced sensitivity to salinity in seed germination and increased tolerance to drought. Taken together, we concluded that KEAs were involved in chloroplast development and played important roles in drought tolerance.