The aim of the study is to develop transgenic rice with annexin genes (AnnBj2) to determine its salinity and water stress tolerance through Agrobacterium-mediated genetic transformation. The transgenic somatic embryos were developed on Murashige and Skoog medium fortified with 0.5 mg L −1 kinetin and 3.0 mg L −1 2,4-D. About 80% of the transformed somatic embryos germinated and was successfully established in the transgenic greenhouse. The transformed plantlets (T 0 and T 1 generation) were identified through PCR using NPT-II and AnnBj2 gene-specific primers as well as positive uidA reporter gene expression. Compared with non-transformed plants, the transgenic rice plants overexpressing AnnBj2 gene exhibited salt tolerance at the seedling stage. Seeds generated at T 0 and T 1 generations were further studied to determine their salinity tolerance through nutrient culture and pot culture experiments for water stress. When compared with the non-transgenic control, transgenic seeds (T 0 and T 1) had increased germination on a nutrient medium having 200 mM NaCl. The data showed that the shoot and root lengths were longer at 200 mM NaCl when compared with those of the non-transformed plants. Further, the biochemical assessment (photosynthetic pigment analysis, protein, proline content, and oxidative enzyme activity) was performed between transformed (T 0 and T 1) and non-transformed plantlets under stress. It was noted that the transformed plantlets were higher in chlorophyll and proline content as well as oxidative enzyme activity as compared with the non-transformed plants.