Type 2C protein phosphatase plays an important role in the signal transduction of stress response in plants. In this paper, we identified a novel stress-induced type 2C protein phosphatase gene OsSIPP2C1 from rice. OsSIPP2C1 contains a complete open reading frame of 1,074 bp, encoding a protein with 357 amino acids. OsSIPP2C1 expression was up-regulated by high salt, PEG6000 and exogenous ABA, and enhanced in the abl1 mutant under normal, salt, or drought condition. Interestingly, OsSIPP2C1 expression was increased during the early panicle development. Subcellular localization assay using rice protoplast cells indicated that OsSIPP2C1 was predominantly located in the nucleus. Together, it is suggested that a nuclear PP2C protein OsSIPP2C1 negatively regulated by ABL1 is involved in abiotic stress and panicle development in rice.