Background Basic helix-loop-helix (bHLH) transcription factors (TFs) are one of the largest gene families in plants. They regulate gene expression through interactions with specific motifs in target genes. bHLH TFs are not only universally involved in plant growth but also play an important role in plant responses to abiotic stress. However, most members of this family have not been functionally characterized. Results Here, we characterized the function of a bHLH TF in the peanut, AhHLH112, in response to drought stress. AhHLH112 is localized in the nucleus and it was induced by drought stress. The overexpression of this gene improves the drought tolerance of transgenic plants both in seedling and adult stages. Compared to wild-type plants, the transgenic plants accumulated less reactive oxygen species (ROS), accompanied by increased activity and transcript levels of antioxidant enzymes (superoxide dismutase, peroxidase and catalase). In addition, the WT plants demonstrated higher MDA concentration levels and higher water loss rate than the transgenic plants under drought treatment. The Yeast one-hybrid result also demonstrates that AhbHLH112 directly and specifically binds to and activates the promoter of the peroxidase (POD) gene. Besides, overexpression of AhHLH112 improved ABA level under drought condition, and elevated the expression of genes associated with ABA biosynthesis and ABA responding, including AtNCED3 and AtRD29A. Conclusions Drawing on the results of our experiments, we propose that, by improving ROS-scavenging ability, at least in part through the regulation of POD -mediated H2O2 homeostasis, and possibly participates in ABA-dependent stress-responding pathway, AhbHLH112 acts as a positive factor in drought stress tolerance.