To reveal the mechanisms underlying root adaptation to drought stress, we isolated and characterized an Arabidopsis mutant, dig5 (drought inhibition of lateral root growth 5), which exhibited increased sensitivity to the phytohormone abscisic acid (ABA) for the inhibition of lateral root growth. The dig5 mutant also had fewer lateral roots under normal conditions and the aerial parts were yellowish with a lower level of chlorophylls. The mutant seedlings also displayed phenotypes indicative of impaired auxin transport, such as abnormal root curling, leaf venation defects, absence of apical hook formation, and reduced hypocotyl elongation in darkness. Auxin transport assays with [3H]-labeled indole acetic acid (IAA) confirmed that dig5 roots were impaired in polar auxin transport. Map-based cloning and complementation assays indicated that the DIG5 locus encodes a chloroplast-localized tRNA adenosine deaminase arginine (TADA) that is involved in chloroplast protein translation. The levels of flavonoids, which are naturally occurring auxin transport inhibitors in plants, were significantly higher in dig5 roots than in the wild type roots. Further investigation showed that flavonoid biosynthetic genes were upregulated in dig5. Introduction of the flavonoid biosynthetic mutation transparent testa 4 (tt4) into dig5 restored the lateral root growth of dig5. Our study uncovers an important role of DIG5/TADA in retrogradely controlling flavonoid biosynthesis and lateral root development. We suggest that the DIG5-related signaling pathways, triggered likely by drought-induced chlorophyll breakdown and leaf senescence, may potentially help the plants to adapt to drought stress through optimizing the root system architecture.