Common wheat, Triticum aestivum, is the most widely grown staple crop worldwide. To catch up with the increasing global population and cope with the changing climate, it is valuable to breed wheat cultivars that are tolerant to abiotic or shade stresses for density farming. Arabidopsis LONG HYPOCOTYL IN FAR-RED 1 (AtHFR1), a photomorphogenesis-promoting factor, is involved in multiple light-related signaling pathways and inhibits seedling etiolation and shade avoidance. We report that overexpression of AtHFR1 in wheat inhibits etiolation phenotypes under various light and shade conditions, leading to shortened plant height and increased spike number relative to non-transgenic plants in the field. Ectopic expression of AtHFR1 in wheat increases the transcript levels of TaCAB and TaCHS as observed previously in Arabidopsis, indicating that the AtHFR1 transgene can activate the light signal transduction pathway in wheat. AtHFR1 transgenic seedlings significantly exhibit tolerance to osmotic stress during seed germination compared to non-transgenic wheat. The AtHFR1 transgene represses transcription of TaFT1, TaCO1, and TaCO2, delaying development of the shoot apex and heading in wheat. Furthermore, the AtHFR1 transgene in wheat inhibits transcript levels of PHYTOCHROME-INTERACTING FACTOR 3-LIKEs (TaPIL13, TaPIL15-1B, and TaPIL15-1D), downregulating the target gene STAYGREEN (TaSGR), and thus delaying dark-induced leaf senescence. In the field, grain yields of three AtHFR1 transgenic lines were 18.2–48.1% higher than those of non-transgenic wheat. In summary, genetic modification of light signaling pathways using a photomorphogenesis-promoting factor has positive effects on grain yield due to changes in plant architecture and resource allocation and enhances tolerances to osmotic stress and shade avoidance response.