To overcome the salinity-induced loss of crop yield, a salinity-tolerant trait is required. The SUV3 helicase is involved in the regulation of RNA surveillance and turnover in mitochondria, but the helicase activity of plant SUV3 and its role in abiotic stress tolerance have not been reported so far. Here we report that the Oryza sativa (rice) SUV3 protein exhibits DNA and RNA helicase, and ATPase activities. Furthermore, we report that SUV3 is induced in rice seedlings in response to high levels of salt. Its expression, driven by a constitutive cauliflower mosaic virus 35S promoter in IR64 transgenic rice plants, confers salinity tolerance. The T1 and T2 sense transgenic lines showed tolerance to high salinity and fully matured without any loss in yields. The T2 transgenic lines also showed tolerance to drought stress. These results suggest that the introduced trait is functional and stable in transgenic rice plants. The rice SUV3 sense transgenic lines showed lesser lipid peroxidation, electrolyte leakage and H2O2 production, along with higher activities of antioxidant enzymes under salinity stress, as compared with wild type, vector control and antisense transgenic lines. These results suggest the existence of an efficient antioxidant defence system to cope with salinity-induced oxidative damage. Overall, this study reports that plant SUV3 exhibits DNA and RNA helicase and ATPase activities, and provides direct evidence of its function in imparting salinity stress tolerance without yield loss. The possible mechanism could be that OsSUV3 helicase functions in salinity stress tolerance by improving photosynthesis and antioxidant machinery in transgenic rice.