Drought is one of the most severe environmental stress factors limiting crop yield especially when occurring during anthesis and seed filling. This terminal drought is characterized by an excess production of the phytohormone abscisic acid (ABA) which plays an important role during seed development and dormancy. All the genes putatively involved in ABA biosynthesis and inactivation in barley were identified and their expression studied during plant ontogeny under standard and drought-stress conditions to learn more about ABA homeostasis and the possible mode of cross-talk between source and sink tissues. Out of 41 genes related to ABA biosynthesis and inactivation 19 were found to be differentially regulated under drought stress in both flag leaves and developing seed during seed filling. Transcripts of plastid-located enzymes are regulated similarly in flag leaf and seed under terminal drought whereas transcripts of cytosolic enzymes are differentially regulated in the two tissues. Detailed information on the expression of defined gene family members is supplemented by measurements of ABA and its degradation and conjugation products, respectively. Under drought stress, flag leaves in particular contain high concentrations of both ABA and the ABA degradation products phaseic acid (PA) and diphaseic acid (DPA); whereas, in seeds, besides ABA, DPA was mainly found. The measurements also revealed a positive correlation between ABA level and starch content in developing seeds for the following reasons: (i) genes of the ABA controlled SnRK2.6 and RCAR/PP2C-mediated signal transduction pathway to the ABF transcription factor HvABI5 are activated in the developing grain under drought, (ii) novel ABA- and dehydration-responsive cis-elements have been found in the promoters of key genes of starch biosynthesis (HvSUS1, HvAGP-L1) and degradation (HvBAM1) and these transcripts/activity are prominently induced in developing seeds during 12 and 16 DAF, (iii) spraying of fluridone (an ABA biosynthesis inhibitor) to drought-stressed plants results in severely impaired starch content and thousand grain weight of mature seeds.