Wild rice Oryza rufipogon, a progenitor of cultivated rice Oryza sativa L., possesses superior salinity tolerance and is a potential donor for breeding salinity tolerance traits in rice. However, a mechanistic basis of salinity tolerance in this donor species has not been established. Here, we examined salinity tolerance from the early vegetative stage to maturity in O. rufipogon in comparison with a salt-susceptible (Koshihikari) and a salt-tolerant (Reiziq) variety of O. sativa. We assessed their phylogeny and agronomical traits, photosynthetic performance, ion contents, as well as gene expression in response to salinity stress. Salt-tolerant O. rufipogon exhibited efficient leaf photosynthesis and less damage to leaf tissues during the course of salinity treatment. In addition, O. rufipogon showed a significantly higher tissue Na+ accumulation that is achieved by vacuolar sequestration compared to the salt tolerant O. sativa indica subspecies. These findings are further supported by the upregulation of genes involved with ion transport and sequestration (e.g. high affinity K+ transporter 1;4 [HKT1;4], Na+/H+ exchanger 1 [NHX1] and vacuolar H+-ATPase c [VHA-c]) in salt-tolerant O. rufipogon as well as by the close phylogenetic relationship of key salt-responsive genes in O. rufipogon to these in salt-tolerant wild rice species such as O. coarctata. Thus, the high accumulation of Na+ in the leaves of O. rufipogon acts as a cheap osmoticum to minimize the high energy cost of osmolyte biosynthesis and excessive reactive oxygen species production. These mechanisms demonstrated that O. rufipogon has important traits that can be used for improving salinity tolerance in cultivated rice.