2R,3R-Butanediol, a volatile compound produced by certain rhizobacteria, is involved in induced drought tolerance in Arabidopsis thaliana through mechanisms involving stomatal closure. In this study, we examined the involvement of nitric oxide and hydrogen peroxide in induced drought tolerance, because these are signaling agents in drought stress responses mediated by abscisic acid (ABA). Fluorescence-based assays showed that systemic nitric oxide and hydrogen peroxide production was induced by 2R,3R-butanediol and correlated with expression of genes encoding nitrate reductase and nitric oxide synthase. Co-treatment of 2R,3R-butanediol with an inhibitor of nitrate reductase or an inhibitor of nitric oxide synthase lowered nitric oxide production and lessened induced drought tolerance. Increases in hydrogen peroxide were negated by co-treatment of 2R,3R-butanediol with inhibitors of NADPH oxidase, or peroxidase. These findings support the volatile 2R,3R-butanediol synthesized by certain rhizobacteria is an active player in induction of drought tolerance through mechanisms involving nitric oxide and hydrogen peroxide production.