Cytochrome P450s are among the largest protein coding gene families in plant genomes. However, majority of the genes remain uncharacterized. Here, we report the characterization of dss1, a rice mutant showing dwarfism and reduced grain size. The dss1 phenotype is caused by a non-synonymous point mutation we identified in DSS1, which is member of a P450 gene cluster located on rice chromosome 3 and corresponds to the previously reported CYP96B4/SD37 gene. Phenotypes of several dwarf mutants characterized in rice are associated with defects in the biosynthesis or perception of the phytohormones gibberellins (GAs) and brassinosteroids (BRs). However, both GA and BR failed to rescue the dss1 phenotype. Hormone profiling revealed the accumulation of abscisic acid (ABA) and ABA metabolites, as well as significant reductions in GA19 and GA53 levels, precursors of the bioactive GA1, in the mutant. The dss1 contents of cytokinin and auxins were not significantly different from wild-type plants. Consistent with the accumulation of ABA and metabolites, germination and early growth was delayed in dss1, which also exhibited an enhanced tolerance to drought. Additionally, expressions of members of the DSS1/CYP96B gene cluster were regulated by drought stress and exogenous ABA. RNA-seq-based transcriptome profiling revealed, among others, that cell wall-related genes and genes involved in lipid metabolism were up- and down-regulated in dss1, respectively. Taken together, these findings suggest that DSS1 mediates growth and stress responses in rice by fine-tuning GA-to-ABA balance, and might as well play a role in lipid metabolism.