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Abstract Water supply limitations will likely impose increasing restrictions on future crop production, underlining a need for crops that use less water per mass of yield. Water use efficiency (WUE) therefore becomes a key consideration in developing resilient and productive crops. In this study, we hypothesized that it is possible to improve WUE under drought conditions via modulation of chloroplast signals for stomatal opening by up-regulation of non-photochemical quenching (NPQ). Nicotiana tabacum plants with strong overexpression of the PsbS gene encoding PHOTOSYSTEM II SUBUNIT S, a key protein in NPQ, were grown under differing levels of drought. The PsbS-overexpressing lines lost 11% less water per unit CO2 fixed under drought and this did not have a significant effect on plant size. Depending on growth conditions, the PsbS-overexpressing lines consumed from 4–30% less water at the whole-plant level than the corresponding wild type. Leaf water and chlorophyll contents showed a positive relation with the level of NPQ. This study therefore provides proof of concept that up-regulation of NPQ can increase WUE, and as such is an important step towards future engineering of crops with improved performance under drought.