A20/AN1 zinc finger domain containing Stress Associated Proteins (SAP) are involved in diverse stress response pathways in plants. In the present study, a novel banana SAP gene, MusaSAP1, was identified from banana EST database and was subsequently characterized by overexpression in transgenic banana plants. Expression profiling in native banana plants showed that MusaSAP1 was up-regulated by drought, salt, cold, heat and oxidative stress as well as by treatment with abscisic acid. Cellular localization assay carried out by making a MusaSAP1:: GFP fusion protein indicated that MusaSAP1 is incompletely translocated to nucleus. Copy number analysis performed using real time PCR and Southern blotting indicated that MusaSAP1 occurs in the banana genome in a single copy per 11 chromosome set. Transgenic banana plants constitutively overexpressing MusaSAP1 displayed better stress endurance characteristics as compared to controls in both in vitro and ex vivo assays. Lesser membrane damage as indicated by reduced malondialdehyde levels in transgenic leaves subjected to drought, salt or oxidative stress pointed towards significant role for MusaSAP1 in stress amelioration pathways of banana. Strong up-regulation of a polyphenol oxidase (PPO) coding transcript in MusaSAP1 overexpressing plants together with induction of MusaSAP1 by wounding and methyl jasmonate treatment indicated possible involvement of MusaSAP1 in biotic stress responses where PPOs perform major functions in multiple defense pathways.