Responses of drought-tolerant (DT) and drought-susceptible (DS) pot-grown groundnut (Arachis hypogaea L.) varieties to changes in leaf relative water content (RWC) were studied. Water stress (WS) was imposed on 30-day-old plants for 2 weeks. Leaf RWC decreased significantly under WS conditions with simultaneous decrease in net photosynthetic rate (PN) and stomatal conductance (gs). Even though no significant difference was observed between DT and DS varieties with regard to RWC, DT varieties were able to maintain significantly higher PN than DS varieties. Higher values of water use efficiency (WUE) were also observed in DT varieties during WS conditions. The decline in PN due to WS could be attributed to both reduction in g s (i.e. stomatal limitation) and to reduction in chlorophyll content (Chl). No significant difference in leaf area index (LAI) was found between DT and DS types and LAI was not reduced by WS. Significant differences were found among the studied groundnut varieties, but not between DT and DS types, in terms of root, aboveground, and total dry mass. These growth parameters significantly decreased under WS conditions. Based on the results, a sequence of physiological responses in groundnut crop subjected to WS was postulated. and P. R. Jeyaramraja, S. S. Thushara.