Photosynthesis and respiration are the hubs of energy metabolism in plants. Drought strongly perturbs photosynthesis as a result of both diffusive limitations resulting from stomatal closure, and in some cases biochemical limitations that are associated with a reduced abundance of key photosynthetic components. The effects of drought on respiration, particularly respiration in the light (RL ), are less understood. The plant mitochondrial electron transport chain includes a non-energy conserving terminal oxidase called alternative oxidase (AOX). Several studies have shown that drought increases AOX transcript, protein and maximum capacity. Here we review recent studies comparing wild-type (WT) tobacco to transgenic lines with altered AOX protein amount. Specifically during drought, RL was compromised in AOX knockdown plants and enhanced in AOX overexpression plants, compared with WT. Significantly, these differences in RL were accompanied by dramatic differences in photosynthetic performance. Knockdown of AOX increased the susceptibility of photosynthesis to drought-induced biochemical limitations, while overexpression of AOX delayed the development of such biochemical limitations, compared with WT. Overall, the results indicate that AOX is essential to maintaining RL during drought, and that this non-energy conserving respiration maintains photosynthesis during drought by promoting energy balance in the chloroplast. This review also outlines several areas for future research, including the possibility that enhancement of non-energy conserving respiratory electron sinks may be a useful biotechnological approach to increase plant performance during stress.