Background: Small heat shock proteins (sHSPs) are critical for plant response to biotic and abiotic stresses, especially heat stress. They have also been implicated in various aspects of plant development. However, the acting mechanisms of the sHSPs in plants, especially in perennial grass species, remain largely elusive. Results: In this study, AsHSP26.8a, a novel chloroplast-localized sHSP gene from creeping bentgrass (Agrostis stolonifera L.) was cloned and its role in plant response to environmental stress was studied. AsHSP26.8a encodes a protein of 26.8 kDa. Its expression was strongly induced in both leaf and root tissues by heat stress. Transgenic Arabidopsis plants overexpressing AsHSP26.8a displayed reduced tolerance to heat stress. Furthermore, overexpression of AsHSP26.8a resulted in hypersensitivity to hormone ABA and salinity stress. Global gene expression analysis revealed AsHSP26.8a-modulated expression of heat-shock transcription factor gene, and the involvement of AsHSP26.8a in ABA-dependent and-independent as well as other stress signaling pathways. Conclusions: Our results suggest that AsHSP26.8a may negatively regulate plant response to various abiotic stresses through modulating ABA and other stress signaling pathways.