Drought and salinity are the major constraints on agricultural production worldwide and a remarkable attempt is being made to improve the plant yields in the direction of increasing water deficit. We have developed transgenic finger millet cultivars 'CO(Ra)-14' and 'Paiyur-2' overexpressing Erianthus arundinaceus DREB2 (EaDREB2) transcription factor. This gene was introduced into finger millet cultivars by Agrobacterium-mediated transformation. EaDREB2 gene was stably expressed in T₀ and T₁ generations of transgenic lines as confirmed by PCR and Southern blot analyses. The transgenic finger millet lines expressing EaDREB2 gene were tolerant to high salinity (100 mM NaCl) and severe drought (with no water up to two weeks) stress conditions without affecting the morphological or agronomic characters. Analysis of morpho-physiological characters revealed that overexpression of EaDREB2 gene was associated with maintenance of chlorophyll content, increased relative water content, improved accumulation of the osmotic substance like proline, and decreased electrolyte leakage, under both saline and drought stresses. After treating the plants to progressive drought and salinity stress, transgenic lines showed less chlorophyll reduction and moderate growth inhibition than the control plants. The majority of the transformed lines showed prominent tolerance to salinity and drought stress with significant spikelet fertility and higher grain yield compared to the non-transgenic control plants in both stressed and unstressed conditions. This is the first holistic report on the development of drought and saline tolerance in finger millet through transgenic modification. The enhancement in abiotic stress tolerance along with agronomic traits is essential in finger millet cultivars to benefit the resource-poor farmers from seasonal drought and water scarcity.