Due to its ability to be rapidly generated and propagated over long distances, H2O2 is an important second messenger for biotic and abiotic stress signaling in plants. In response to low water potential and high salt concentrations sensed in the roots of plants, the stress hormone abscisic acid (ABA) activates NADPH oxidase to generate H2O2, which is propagated in guard cells in leaves to induce stomatal closure and prevent water loss from transpiration. Using a reconstituted system, we demonstrate that H2O2 reversibly prevents the protein phosphatase HAB1, a key component of the core ABA-signaling pathway, from inhibiting its main target in guard cells, SnRK2.6/OST1 kinase. We have identified HAB1 C186 and C274 as H2O2-sensitive thiols and demonstrate that their oxidation inhibits both HAB1 catalytic activity and its ability to physically associate with SnRK2.6 by formation of intermolecular dimers.