Characterization of the function of stress‐related genes helps to understand the mechanisms of plant responses to environmental conditions. The findings of this work defined the role of the wheat Ta HDZipI‐5 gene, encoding a stress‐responsive homeodomain–leucine zipper class I ( HD‐Zip I) transcription factor, during the development of plant tolerance to frost and drought. Strong induction of Ta HDZipI‐5 expression by low temperatures, and the elevated Ta HDZipI‐5 levels of expression in flowers and early developing grains in the absence of stress, suggests that Ta HDZipI‐5 is involved in the regulation of frost tolerance at flowering. The Ta HDZipI‐5 protein behaved as an activator in a yeast transactivation assay, and the Ta HDZipI‐5 activation domain was localized to its C‐terminus. The Ta HDZipI‐5 protein homo‐ and hetero‐dimerizes with related Ta HDZipI‐3, and differences between DNA interactions in both dimers were specified at 3D molecular levels. The constitutive overexpression of Ta HDZipI‐5 in bread wheat significantly enhanced frost and drought tolerance of transgenic wheat lines with the appearance of undesired phenotypic features, which included a reduced plant size and biomass, delayed flowering and a grain yield decrease. An attempt to improve the phenotype of transgenic wheat by the application of stress‐inducible promoters with contrasting properties did not lead to the elimination of undesired phenotype, apparently due to strict spatial requirements for Ta HDZipI‐5 overexpression.