The sodium/lithium tolerance gene previously isolated from Arabidopsis thaliana (AtSLT1) and Nicotiana tabacum (NtSLT1) has been implicated in the regulation of ion homeostasis via the CaN and SPK1/Hal4 signal transduction pathways. A homologous gene from rice (OsSLT1) encoded by an intronless open-reading frame (1563 bp) on chromosome-1 was studied. The 58-kDa OsSLT1 protein contains a highly conserved C-terminal domain characteristic of the small heat-shock protein (smHSP) and α-crystallin classes of molecular chaperons. Biochemical analysis of recombinant full-length, N-terminal-truncated (lacking aa-1 to aa-217), and C-terminal-truncated (lacking aa-443 to aa-521) versions of OsSLT1 indicated that removal of the C-terminal extension enhances chaperon activity as shown by the ability of the truncated protein to prevent thermal and non-thermal aggregation of client proteins in an ATP-independent manner. The C-terminal-truncated OsSLT1 also enhanced thermotolerance of recombinant Escherichia coli. Unlike the smHSPs, which are transcriptionally activated during stress, the activity of SLT1 appears to be modulated via complex mechanisms of protein cleavage. The implication of the results in relation to the immediate cellular defenses against protein denaturation during stress and to the previously demonstrated role of SLT1 in the CaN and SPK1/Hal4 signaling pathways is discussed.