Salt stress is a major increasing threat to global agriculture. Pongamia (Millettia pinnata), a semi-mangrove, is a good model to study the molecular mechanism of plant adaptation to the saline environment. Calcium signaling pathways play critical roles in the model plants such as Arabidopsis in responding to salt stress, but little is known about their function in Pongamia. Here, we have isolated and characterized a salt-responsive MpCML40, a calmodulin-like (CML) gene from Pongamia. MpCML40 protein has 140 amino acids and is homologous with Arabidopsis AtCML40. MpCML40 contains four EF-hand motifs and a bipartite NLS (Nuclear Localization Signal) and localizes both at the plasma membrane and in the nucleus. MpCML40 was highly induced after salt treatment, especially in Pongamia roots. Heterologous expression of MpCML40 in yeast cells improved their salt tolerance. The 35S::MpCML40 transgenic Arabidopsis highly enhanced seed germination rate and root length under salt and osmotic stresses. The transgenic plants had a higher level of proline and a lower level of MDA (malondialdehyde) under normal and stress conditions, which suggested that heterologous expression of MpCML40 contributed to proline accumulation to improve salt tolerance and protect plants from the ROS (reactive oxygen species) destructive effects. Furthermore, we did not observe any measurable discrepancies in the development and growth between the transgenic plants and wild-type plants under normal growth conditions. Our results suggest that MpCML40 is an important positive regulator in response to salt stress and of potential application in producing salt-tolerant crops.