Genetic analyses were conducted to understand the effect of drought in bread wheat. Genetic diversity is the base of any genetic improvement breeding program aimed at stress breeding. One hundred and five wheat genotypes were screened against drought stress using factorial completely randomized design at seedling stage. Significant variation was observed among all genotypes. Shoot length was non-significant and negatively correlated with all other traits except relative water content, so its selection seems not to be a promising criteria for this germplasm. Out of ten principal components (PCs), the first three PCs were significant under both conditions. They showed 74.6% and 76% variation under normal and drought conditions respectively. The ten drought tolerant and five drought susceptible genotypes were selected based on their performance and further analyzed in (10) line × tester (5) mating design for genetic studies. Among parents, the line G1-9493 (L1) and the tester G3-9508 (T1) proved good general combiners for most of the yield contributing traits under both environments. Among the crosses, the G1-9493×G3-9508 (L1×T1) was ideal specific combination for most of the quality and yield related traits under both conditions. Non-additive gene action was more prominent in the inheritance for traits studied. Using 95 SSR markers determined the gene diversity and polymorphic information content (PIC) values ranging from 0.41 and 0.33 to 0.90 and 0.89 respectively, indicating the significant level of genetic diversity. The maximum PIC value 0.89 and lowest PIC value 0.33 were found among the genomes A and D respectively. Genetic diversity among homeologous genomes ranked as: genome A> B> D, based upon PIC values. The studied genotypes divided into four genetically different subgroups based on STRUCTURE Bayesian and DARWIN analysis. According to this analysis, group 1, group 2 and group 3 had 2, 4 and 4 drought tolerant genotypes respectively while group 4 had 4 drought susceptible genotypes. The information generated through SSR markers showed their potentiality for determining genetic diversity and would be helpful in selecting desirable genotypes for obtaining promising results. The present investigations also showed a clear-cut identity of genotypes, which would be of great utility for the protection of Plant Breeder’s Rights. The superior genotype G1-9493 and cross G1-9493×G3-9508 can be combined to develop new promising and improved varieties under water stress conditions.