The nuclear-encoded chloroplast small heat shock proteins (sHSPs) are present in all plant species from algae to angiosperms. Expression analysis shows that the wheat chloroplastic sHSP (HSP26) is highly inducible by heat stress in almost all the vegetative and generative tissues and is also expressed constitutively in certain developmental growth stages. We characterize wheat chloroplastic sHSP 26 through transgenic approach using Arabidopsis and report cloning of the promoter and its characterization. Transgenic Arabidopsis plants were substantially tolerant under continuous high temperature regimen than wild-type plants, as measured by photosystem II (PSII) activity, accumulation of more photosynthetic pigments, higher biomass and seed yield. Transgenic plants produced bold seeds under high temperature, having higher germination potential than the wild-type plants. Further, antisense Arabidopsis plants showed negligible tolerance even for non-lethal heat shock, impaired in basal thermo-tolerance, and accumulated less biomass and seed yield under normal growth conditions. Promoter analysis revealed the presence of several heat and other abiotic stress responsive cis-acting elements along with developmental stage and tissue-specific elements. Analysis of promoter through GUS reporter system in both transgenic rice and Arabidopsis further confirms the role of chloroplastic sHsp26 in heat and other abiotic stresses as well as during seed maturation and germination. Genome-wide expression analysis of overexpression Arabidopsis plants revealed that the transcriptome remained unchanged in the transgenic plants and the tolerance was due to the overexpression of chloroplastic heat shock protein (HSP) only.