The gene, called OSCA1, encodes a protein in the cell membrane of plants that senses changes in water availability and adjusts the plant's water conservation machinery accordingly.
"It's similar to a thermostat," said Zhen-Ming Pei, an associate professor of biology at Duke University.
The findings could make it easier to feed the world's growing population in the face of climate change, researchers said.
Drought is the major cause of crop losses worldwide. A dry spell at a crucial stage of the growing season can cut some crop yields in half.
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Coupled with a world population that is expected to increase by two billion to three billion by 2050, researchers worldwide are looking for ways to produce more food with less water.
Engineering plants to withstand drought has proven difficult to do, largely because plants use so many strategies to deal with dehydration and hundreds of genes are involved.
The problem is confounded by the fact that drought is often accompanied by heat waves and other stresses that require different coping strategies on the part of the plant, Pei said.
But until now, the molecular machinery that plants use to send this signal - and monitor water availability in general - remained unknown.
Pei and colleagues identified a gene that encodes a protein in the cell membranes of plant leaves and roots, called OSCA1, which acts as a channel that allows calcium to surge into the cell in times of drought.
The gene was identified in Arabidopsis thaliana, a small unassuming plant related to cabbage and canola that is the lab rat of plant research.
When the researchers grew normal plants and plants with defective versions of the gene side by side in the same pot and exposed them to drought stress, the mutant plants experienced more wilting.
The findings could lead to new ways to help plants thrive when water is scarce.
The research appears in the journal Nature.