A pot culture experiment was conducted during summer, 1990 to study the effect of water stress on biophysical parameters and yield in two groundnut varieties. It was observed that the genotype Dh-3-30 was more tolerant to drought as compared with TMV-2 and had the least transpiration rate with maximum diffusive resistance. Stress imposed at different stages indicated that 50 DAS is more sensitive and detrimental to yield as compared to stress at early DAS) and later (70 DAS) stages