Phosphoenolpyruvate carboxylase (PEPC; EC 4.1.1.31) has important functions in C4 photosynthesis and biosynthesis of intermediate metabolites. In this study, the drought resistance of C4‐PEPC‐expressing transgenic rice (Oryza sativa, line PC) plants was assessed using simulated drought conditions [i.e. polyethylene glycol (PEG)‐6000 treatment]. The dry weight of PC plants was higher than that of wild‐type (WT) plants following treatment with 15% PEG‐6000 for 16 days. Furthermore, the water use efficiency, relative water content and proline content in PC plants were higher than those of WT plants, as were C4‐PEPC activity and transcript levels following treatment with 5% PEG‐6000 for 2 h. The protein kinase activities and transcript levels of sucrose non‐fermenting‐1‐related protein kinases (SnRKs) genes, such as SnRK1a, OsK24 and OsK35 were also higher in PC plants than in WT plants following treatment with 5% PEG‐6000 for 2 h. Additionally, phosphoenolpyruvate carboxylase kinase (PPCK, EC 4.1.1.32) activities and transcript levels (e.g. PPCK1 and PPCK2) increased following drought treatment. These changes were regulated by signaling molecules, such as calcium, nitric oxide and hydrogen peroxide. Furthermore, the −1095 to −416 region of the C4‐PEPC promoter in PC plants was demethylated following exposure to drought conditions for 1 h. The demethylation coincided with an increase in C4‐PEPC expression. Our data suggest that the demethylation of the C4‐PEPC promoter and the phosphorylation catalyzed by PPCK have key roles in conferring drought tolerance to the transgenic rice plants.