The recent rapid climate changes and increasing global population have led to an increased incidence of abiotic stress and decreased crop productivity. Environmental stresses, such as temperature, drought, nutrient deficiency, salinity, and heavy metal stresses, are major challenges for agriculture, and they lead to a significant reduction in crop growth and productivity. Abiotic stress is a very complex phenomenon, involving a variety of physiological and biochemical changes in plant cells. Plants exposed to abiotic stress exhibit enhanced levels of ROS (reactive oxygen species), which are highly reactive and toxic and affect the biosynthesis of chlorophyll, photosynthetic capacity, and carbohydrate, protein, lipid, and antioxidant enzyme activities. Transgenic breeding offers a suitable alternative to conventional breeding to achieve plant genetic improvements. Over the last two decades, genetic engineering/transgenic breeding techniques demonstrated remarkable developments in manipulations of the genes for the induction of desired characteristics into transgenic plants. Transgenic approaches provide us with access to identify the candidate genes, miRNAs, and transcription factors (TFs) that are involved in specific plant processes, thus enabling an integrated knowledge of the molecular and physiological mechanisms influencing the plant tolerance and productivity. The accuracy and precision of this phenomenon assures great success in the future of plant improvements. Hence, transgenic breeding has proven to be a promising tool for abiotic stress improvement in crops. This review focuses on the potential and successful applications, recent progress, and future perspectives of transgenic breeding for improving abiotic stress tolerance and productivity in plants.