Defining the metabolic strategies used by wheat to tolerate and recover from drought events will be important for ensuring yield stability in the future, but studies addressing this critical research topic are limited. To this end, the current study quantified the physiological, biochemical, and agronomic responses of a drought tolerant and drought sensitive cultivar to periods of water deficit and recovery. Drought stress caused a reversible decline in leaf water relations, membrane stability, and photosynthetic activity, leading to increased reactive oxygen species (ROS) generation, lipid peroxidation and membrane injury. Plants exhibited osmotic adjustment through the accumulation of soluble sugars, proline, and free amino acids and increased enzymatic and non-enzymatic antioxidant activities. After re-watering, leaf water potential, membrane stability, photosynthetic processes, ROS generation, anti-oxidative activities, lipid peroxidation, and osmotic potential completely recovered for moderately stressed plants and did not fully recover in severely stressed plants. Higher photosynthetic rates during drought and rapid recovery after re-watering produced less-pronounced yield declines in the tolerant cultivar than the sensitive cultivar. These results suggested that the plant’s ability to maintain functions during drought and to rapidly recover after re-watering during vegetative periods are important for determining final productivity in wheat.