Nicotiana tabacum (tobacco) is one of the most important industrial crops and its productivity is vulnerable to drought, particularly in Yunnan province, China due to the long water-deficit spring. Here, we aimed at identifying caffeic acid O-methyltransferase (COMT) in melatonin biosynthesis to provide genetic resources against drought tolerance of tobacco. The integration of the genome-wide identification, phylogenetic relationships, and conserved domain/motif analysis revealed that NtCOMT1 could be the probable functional COMT homolog for melatonin production. In vitro enzyme activity test approved that NtCOMT1 enabled the conversion of N-acetylserotonin into melatonin, occurring both in the cytoplasm and nucleus by subcellular localization analysis. The Km and Vmax values for NtCOMT1 at the optimum temperature (30 °C) were 266.0 μM and 2.155 nmol/min/mg protein. NtCOMT1 was significantly induced by drought stress; whereby if this gene functioned on promoting drought resistance was further conducted. Overexpression of NtCOMT1 resulted in decreased wilting in transgenic tobacco plants subjected to dehydration treatment. The combinatorial effects of NtCOMT1 in increasing melatonin content, inducing antioxidant system, and elevating the expression of drought-related genes could deliver the drought tolerance in tobacco. The characterization of NtCOMT1 may represent a solution to cope with the increasing drought stress in tobacco production in Yunnan province.