Previously, we identified >1,500 genes that were induced by high salt stress in sheepgrass (Leymus chinensis, Gramineae: Triticeae) when comparing the changes in their transcription levels in response to high salt stress by next-generation sequencing. Among the identified genes, a gene of unknown function (designated as Leymus chinensis salt-induced 1, LcSAIN1) showed a high sequence identity to its homologs from wheat, Hordeum vulgare and Oryza sativa, but LcSAIN1 and its homologs produce hypothetical proteins with no conserved functional domains. Transcription of the LcSAIN1 gene was up-regulated by various stresses. The overexpression of LcSAIN1 in Arabidopsis and rice increased the greening rate of cotyledons, the fresh weight, root elongation, plant height and the plant survival rate when compared with control plants and conferred a tolerance against salt stress. Subcellular localization analysis indicated that LcSAIN1 is localized predominantly in the nucleus. Our results show that the LcSAIN1 gene might play an important positive modulation role in increasing the expression of transcription factors (MYB2 and DREB2A) and functional genes (P5CS and RAB18) in transgenic plants under salt stress and that it augments stress tolerance through the accumulation of compatible solutes (proline and soluble sugar) and the alleviation of changes in reactive oxygen species. The LcSAIN1 gene could be a potential resource for engineering salinity tolerance in important crop species.