Drought stress threatens the productivity of numerous crops, including chilli pepper (Capsicum annuum). DnaJ proteins are known to play a protective role against a wide range of abiotic stresses. This study investigates the regulatory mechanism of the chloroplast‐targeted chaperone protein AdDjSKI, derived from wild peanut (Arachis diogoi), in enhancing drought tolerance in chilli peppers. Overexpressing AdDjSKI in chilli plants increased chlorophyll content, reflected in the maximal photochemical efficiency of photosystem II (PSII) (Fv/Fm) compared with untransformed control (UC) plants. This enhancement coincided with the upregulated expression of PSII‐related genes. Our subsequent investigations revealed that transgenic chilli pepper plants expressing AdDjSKI showed reduced accumulation of superoxide and hydrogen peroxide and, consequently, lower malondialdehyde levels and decreased relative electrolyte leakage percentage compared with UC plants. The mitigation of ROS‐mediated oxidative damage was facilitated by heightened activities of antioxidant enzymes, including superoxide dismutase, catalase, ascorbate peroxidase, and peroxidase, coinciding with the upregulation of the expression of associated antioxidant genes. Additionally, our observations revealed that the ectopic expression of the AdDjSKI protein in chilli pepper plants resulted in diminished ABA sensitivity, consequently promoting seed germination in comparison with UC plants under different concentrations of ABA. All of these collectively contributed to enhancing drought tolerance in transgenic chilli plants with improved root systems when compared with UC plants. Overall, our study highlights AdDjSKI as a promising biotechnological solution for enhancing drought tolerance in chilli peppers, addressing the growing global demand for this economically valuable crop.