Abiotic stresses limit crop growth and yield. GRAS transcription factors (TFs) are plant-specific TFs that play an important role in many plant processes, including abiotic stress response. However, there are few studies on the involvement of the GRAS gene in stress response in Salvia miltiorrhiza. This study identified a GRAS TF from S. miltiorrhiza, named SmGRAS5, which belongs to the scarecrow-like 3 (SCL3) group involved in root formation. Transcriptome analysis showed that the SmGRAS5 overexpressed (OE) lines of S. miltiorrhiza expressed many genes related to stress response and secondary metabolism. SmGRAS5 was strongly induced by drought and high salinity. Overexpression of SmGRAS5 could improved drought and salt tolerance in transgenic S. miltiorrhiza plants by regulating stress-related genes. Physiological tests showed that transgenic plants had higher chlorophyll content, photosynthetic capacity, superoxide dismutase (SOD), peroxidase (POD), and catalase activities (CAT), which enhanced plant drought resistance and salt tolerance. In addition, the content of tanshinones in transgenic SmGRAS5 was significantly increased, and most genes of related biosynthetic pathways were up-regulated. These results may provide a candidate gene involved in abiotic stress response and secondary metabolism and provide a theoretical basis for elucking the mechanisms of SmGRAS5 in abiotic stress response of S. miltiorrhiza.