Seed dormancy is a trait of considerable adaptive significance because it maximizes seedling survival by preventing premature germination under unfavorable conditions. Understanding how seeds break dormancy and initiate growth is also of great agricultural and biotechnological interest. Abscisic acid (ABA) plays primary regulatory roles in the initiation and maintenance of seed dormancy. Here we report that the basic leucine zipper transcription factor ABI5 confers an enhanced response to exogenous ABA during germination, and seedling establishment, as well as subsequent vegetative growth. These responses correlate with total ABI5 levels. We show that ABI5 expression defines a narrow developmental window following germination, during which plants monitor the environmental osmotic status before initiating vegetative growth. ABI5 is necessary to maintain germinated embryos in a quiescent state thereby protecting plants from drought. As expected for a key player in ABA-triggered processes, ABI5 protein accumulation, phosphorylation, stability, and activity are highly regulated by ABA during germination and early seedling growth.