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The function of miR165/166 in plant growth and development has been extensively studied, however, its roles in abiotic stress responses remain largely unknown. Here, we report that reduction in the expression of miR165/166 conferred a drought and cold resistance phenotype and hypersensitivity to ABA during seed germination and post-germination seedling development. We further show that the ABA hypersensitive phenotype is associated with a changed transcript abundance of ABA-responsive genes and a higher expression level of ABI4, which can be directly regulated by a miR165/166 target. Additionally, we found that reduction in miR165/166 expression leads to elevated ABA levels, which occurs at least partially through the increased expression of BG1, a gene that is directly regulated by a miR165/166 target. Taken together, our results uncover a novel role for miR165/166 in the regulation of ABA and abiotic stress responses and control of ABA homeostasis.