Water stress is a key constraint in grain production of bread wheat. Using genomic and advanced breeding tools, genetic improvement in wheat and other crops is possible under water stress conditions. Fifty wheat genotypes were screened against water stress using traits like relative water contents and excised leaf water loss. Two water stress tolerant (Chakawal-50 and mairaj-08) and two susceptible (9436 and Millat-11) genotypes were identified and crossed to develop F1, F2 and backcross generations. Genetic analysis was conducted for relative water contents, excised leaf water loss, cell membrane thermo-stability, photosynthetic rate, stomatal conductance, CO2 assimilation, chlorophyll contents, plant height, flag leaf area, specific flag leaf area, peduncle length, spike length, number of tillers per plant, grain weight per spike, number of grains per spikes, 1000-grain weight, grain yield per plant and harvest index. Presence of additive, dominance and epistatic components were identified. Gene action was found complex showed that selection should be done in later generations for improvement of traits. Medium to high broad sense heritability, low to medium narrow sense heritability and low to high genetic advance was observed. Analysis under normal and water stress conditions revealed heterosis for relative water contents, excised leaf water loss, chlorophyll contents and plant height. Correlation analysis showed that relative water contents, cell membrane thermo-stability, photosynthetic rate and grain yield per plant were positively correlated with each other. Excised leaf water loss was negatively correlated with cell membrane thermo-stability, photosynthetic rate, relative water contents and grain yield per plant. A total of 30 ISSR markers were used to survey F2 population developed by a cross of Chakawal-50 (tolerance) and 9436 (susceptible) revealing a lots of DNA polymorphism. DNA polymorphism was used to construct genetic linkage map. In linkage analysis 73 bands produced from 4 ISSR markers were mapped on chromosomes. One QTL for photosynthetic rate on chromosome 3A, one for cell membrane thermo-stability on chromosome 2B and one for relative water contents on chromosome 4D was identified. These QTLs could be used to mold wheat genome into water stress tolerant wheat genome.