Anhydrobiotes are rare microbes, plants and animals that tolerate severe water loss. Understanding the molecular basis for their desiccation tolerance may provide novel insights into stress biology and critical tools for engineering drought-tolerant crops. Using the anhydrobiote, budding yeast, we show that trehalose and Hsp12, a small intrinsically disordered protein (sIDP) of the hydrophilin family, synergize to mitigate completely the inviability caused by the lethal stresses of desiccation. We show that these two molecules help to stabilize the activity and prevent aggregation of model proteins both in vivo and in vitro. We also identify a novel in vitro role for Hsp12 as a membrane remodeler, a protective feature not shared by another yeast hydrophilin, suggesting that sIDPs have distinct biological functions.