Plant peptide hormones play crucial roles in plant development, defense against pathogens, and tolerance to abiotic stress. However, only a limited number of hormone-like peptides have been confirmed to contribute to salt and drought stress tolerance in plants beyond Arabidopsis. This study focuses on the isolation and characterization of MsPROPEP1, a propeptide precursor gene from the leguminous grass Medicago sativa. The transcription of MsPROPEP1 was shown to be inducible by NaCl, polyethylene glycol (PEG), and abscisic acid (ABA). Constitutive expression of MsPROPEP1 in alfalfa seedlings alleviated growth restrictions caused by salinity or osmotic stress and increased sensitivity to ABA-induced stomatal closure. Furthermore, application of synthesized MsPep1 peptide enhanced tolerance to stress induced by NaCl and PEG. In MsPROPEP1 overexpression transgenic plants, activation of several ABA-dependent stress-responsive genes was observed. These results highlight MsPROPEP1 as a potential candidate for genetic manipulation to enhance salinity and drought tolerance in legume species.