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With climate change, droughts are expected to be more frequent and severe, severely impacting plant biomass and quality. Here, we show that overexpressing the Arabidopsis gene AtFtsHi3 (FtsHi3OE) enhances drought-tolerant phenotypes without compromising plant growth. AtFtsHi3 encodes a chloroplast envelope pseudo-protease; knock-down mutants (ftshi3-1) are found to be drought tolerant but exhibit stunted growth. Altered AtFtsHi3 expression therefore leads to drought tolerance, while only diminished expression of this gene leads to growth retardation. To understand the underlying mechanisms of the enhanced drought tolerance, we compared the proteomes of ftshi3-1 and pFtsHi3-FtsHi3OE (pFtsHi3-OE) to wild-type plants under well-watered and drought conditions. Drought-related processes like osmotic stress, water transport, and abscisic acid response were enriched in pFtsHi3-OE and ftshi3-1 mutants following their enhanced drought response compared to wild-type. The knock-down mutant ftshi3-1 showed an increased abundance of HSP90, HSP93, and TIC110 proteins, hinting at a potential downstream role of AtFtsHi3 in chloroplast pre-protein import. Mathematical modeling was performed to understand how variation in the transcript abundance of AtFtsHi3 can, on the one hand, lead to drought tolerance in both overexpression and knock-down lines, yet, on the other hand, affect plant growth so differently. The results led us to hypothesize that AtFtsHi3 may form complexes with at least two other protease subunits, either as homo- or heteromeric structures. Enriched amounts of AtFtsH7/9, AtFtsH11, AtFtsH12, and AtFtsHi4 in ftshi3-1 suggest a possible compensation mechanism for these proteases in the hexamer.