Red pepper (Capsicum annum L.) is an increasingly important economic crop in the world. Thus, this study aimed to investigate the growth, physiological, and biochemical responses of red pepper cultivars under drought stress conditions. A pot culture experiment was conducted in a completely randomized design with three replications, four treatments, and three cultivars. Totally, 36 pots and six seeds per pot were used to grow the seeds. After five weeks, the cultivars were exposed to different drought stress conditions (100% FC or control, 80% FC or low stress, 60% FC or moderate stress, and 40% FC or severe stress). All the collected data were subjected to an analysis of variance (ANOVA). Shoot length was reduced significantly ( p < 0.05 ) in the Hagerew cultivar under severe drought stress. The photosynthesis rate was reduced by 21.11% ( p < 0.05 ) in the Mitmita cultivar under severe drought stress. The highest percentage reduction of chlorophyll content (77.28%) was recorded in the Hagerew cultivar. Both Markofana and Mitmita responded to drought stress by increasing the accumulation of proline and phenolic compounds. The root-to-shoot ratio was increased significantly in both Markofana and Mitmita cultivars (27.91% and 50.92%), respectively, under drought-stress conditions. This study depicted that the cultivar Mitmita was the most drought-tolerant cultivar among the three cultivars.