Water stress is one of the most important environmental constraints that limit survival and productivity of staple crops like wheat and maize particularly in arid and semi-arid regions. Plant growth promoting Rhizobacteria (Rhizobium and Azospirillum) are beneficial bacteria present in soil and forming associations with roots of plants. Present study was aimed at isolation and biochemical characterization of Rhizobium and Azospirillum strains from roots and rhizospheric soil of wheat and maize (at tillering and anthesis stage) growing under different moisture regimes in the field and under induced water stress in pots. The survival efficiency as measured by log cfu/g, carbon/nitrogen utilization pattern determined by QTS (Quick Test System), random amplification of polymorphic DNA analyses, phytohormone production and 16sRNA sequence analysis were done for isolated strains. The efficiency of isolated strains to promote plant growth and development was tested under induced water stress conditions in reinoculation studies. The survival efficiency of Rhizobium and Azospirillum isolates from plants of irrigated field (Experiment I) and those from well watered pots (Experiment II) was higher as compared to that of Rhizobium and Azospirillum isolates from roots and rhizosphere samples of arid (8 % soil moisture) and semiarid field ( 14 % soil moisture)plants and waters stressed plants( 8 % soil moisture) in pots. There was no significant difference in the survival efficiency between root and rhizospheric soil isolates. The effect of low soil moisture on colony forming unit was more pronounced at anthesis stage of plant growth as compared to tillering stage. The value of cfu/g was higher for isolates from maize as compared to that of wheat. On the basis of carbon/nitrogen utilization patterns the Rhizobium and Azospirillum isolates from wheat and maize field were placed in three different groups depending upon the different moisture regimes from where these strains were isolated. xviThe UPGMA (Unweighted Pair Group Method with Arithmetic Means) cluster analysis based on Random Amplification of Polymorphic DNA (RAPD) tests grouped Rhizobium and Azospirillum isolates in two. The results revealed that QTS test can not solely be implicated to fully characterize microbes and for better understanding of phylogenetic relationship, molecular characterization e.g. RAPD-PCR is preferred. The strains isolated from plants growing at semi arid regions in field and under induced water stressed in pots at tillering stage exhibited close genetic relatedness to the strains isolated from plants growing under irrigated field conditions and well watered conditions in pots respectively. While the strains isolated from field plants growing at semi arid region at anthesis stage were found to bear close genetic relatedness with the strains isolated from plants growing in arid regions in field. Reinoculation experiments with both field and pot isolates revealed that the strains of Rhizobium and Azospirillum isolated from well watered plants grown in field or pot have less effect on plant growth of either chickpea or wheat used as host respectively, whereas Rhizobium and Azospirillum isolated from arid fields and plants growing under water stressed pot conditions performed better exposed to induced water stress. The amount of IAA, GA, ABA and trans zeatin riboside produced in the presence of tryptophan was considerably higher as compared to medium from which tryptophan was omitted. Moisture stress at all levels (14 to 8% soil moisture) decreased the production of IAA, GA and trans zeatin riboside but ABA production was increased. These isolates further showed bacteriocin production. Degree of association of microbes appears to depend on developmental stage and on its root architecture of host plants. Rhizobium and Azospirillum isolated from arid field and induced water stress in pots can be used as inocula to promote growth and yield of plants grown in moisture deficit soil.