Drought negatively affects plant growth and development to cause major yield losses in crops. Transcription factors (TFs) play important roles in abiotic stress response signaling in plant. However, the biological functions of membrane-bound transcription factors (MTFs) in abiotic stress have rarely been studied in wheat. In this study, we identified a NAC family MTF (NTM1-like, NTL proteins) gene named TaNTL1, which encodes 481 amino acids residues with a transmembrane motif at the C-terminal. Quantitative results and expression profile analysis showed that TaNTL1 could respond to drought. We demonstrated the transcriptional activity of TaNTL1 and that it could specifically bind to NAC recognition cis-acting elements (NACBS). The full-length TaNTL1 protein localized in the plasma membrane and TaNTL1 lacking the transmembrane motif (TaNTL1-ΔTM) localized in the nucleus. TaNTL1 was proteolytically activated by PEG6000 and abscisic acid (ABA). Phenotypic and physiological analyses showed that overexpression transgenic Arabidopsis exhibited enhanced drought resistance, which was greater with TaNTL1-ΔTM than TaNTL1. Transient silencing of TaNTL1 significantly reduced the resistance to drought stress in wheat. Most of the stress-related genes in transgenic plants were upregulated under drought conditions. These results suggest that MTF TaNTL1 is a positive regulator of drought and it may function by entering the nucleus through cleavage.