Melatonin (MT), a naturally occurring compound, is found in various species worldwide. In 1958, it was first identified in the pineal gland of dairy cows. MT is an “old friend” but a “new compound” for plant biology. It brings experts and research minds from the broad field of plant sciences due to its considerable influence on plant systems. The MT production process in plants and animals is distinct, where it has been expressed explicitly in chloroplasts and mitochondria in plants. Tryptophan acts as the precursor for the formation of phyto-melatonin, along with intermediates including tryptamine, serotonin, N-acetyl serotonin, and 5-methoxy tryptamine. It plays a vital role in growth phases such as the seed germination and seedling growth of crop plants. MT significantly impacts the gas exchange, thereby improving physio-chemical functions in plant systems. During stress, the excessive generation and accumulation of reactive oxygen species (ROS) causes protein oxidation, lipid peroxidation, nucleic acid damage, and enzyme inhibition. Because it directly acts as an antioxidant compound, it awakens the plant antioxidant defense system during stress and reduces the production of ROS, which results in decreasing cellular oxidative damage. MT can enhance plant growth and development in response to various abiotic stresses such as drought, salinity, high temperature, flooding, and heavy metals by regulating the antioxidant mechanism of plants. However, these reactions differ significantly from crop to crop and are based on the level and kind of stress. The role of MT in the physiological functions of plants towards plant growth and development, tolerance towards various abiotic stresses, and approaches for enhancing the endogenous MT in plant systems are broadly reviewed and it is suggested that MT is a steering compound in directing major physiological functions of plants under the changing climate in future.