Nitrate is an essential nutrient, and is involved in many adaptive responses of plants, such as localized proliferation of roots, flowering or stomatal movements. How such nitrate-specific mechanisms are regulated at the molecular level is poorly understood. Although the Arabidopsis ANR1 transcription factor appears to control stimulation of lateral root elongation in response to nitrate, no regulators of nitrate assimilation have so far been identified in higher plants. Legume-specific symbiotic nitrogen fixation is under the control of the putative transcription factor, NIN, in Lotus japonicus. Recently, the algal homologue NIT2 was found to regulate nitrate assimilation. Here we report that Arabidopsis thaliana NIN-like protein 7 (NLP7) knockout mutants constitutively show several features of nitrogen-starved plants, and that they are tolerant to drought stress. We show that nlp7 mutants are impaired in transduction of the nitrate signal, and that the NLP7 expression pattern is consistent with a function of NLP7 in the sensing of nitrogen. Translational fusions with GFP showed a nuclear localization for the NLP7 putative transcription factor. We propose NLP7 as an important element of the nitrate signal transduction pathway and as a new regulatory protein specific for nitrogen assimilation in non-nodulating plants.