A novel cDNA encoding DRE-binding transcription factor, designated GhDBP3, was cloned from Gossypium hirsutum. This protein was classified into A-4 group of DREB subfamily based on multiple sequence alignment and phylogenetic characterization. Semiquantitative RT-PCR showed that GhDBP3 was expressed in the leaves, cotyledons, roots and stems of 2-week-old cotton seedlings under non-stress conditions and was greatly induced in the cotton cotyledons by drought, NaCl, low temperature and ABA treatment. EMSA revealed that GhDBP3 was able to bind to the DRE cis-element in vitro. Transient assay using the particle bombardment method showed that GhDBP3 was a transcriptional activator, capable of activating expression of a reporter gene driven by the LEA D113 promoter containing a DRE like sequence in tobacco cells. Our results indicate that GhDBP3 could be a new member of DRE-binding transcription factor family and may play an important role in response to ABA and environmental stresses.