In rice, several cultivated and upland varieties need to be assessed and analyzed for drought tolerance traits which could be used in screening and breeding programs for drought tolerance. Hence, the objectives of this study were to investigate the effects of water deficits in two rice cultivars and thereby analyze the role of several physiological traits useful in rice breeding programs for drought tolerance. The rice varieties Tellahamsa (TH) and N 22 were screened for tolerance to drought. A comparative study was done subjecting them to PEG mediated water stress. Accumulation of solutes, i.e., proline, total free aminoacids and sugars; biomass production, Relative Water Content (RWC) and the levels of antioxidant enzymes, viz., Catalase (CAT), Ascorbate Peroxidase (APX), Glutathione Reductase(GR), and Superoxide Dismutase(SOD) were analyzed in response to water stress. Maximum proline accumulation was seen within 24hrs of stress, after 10 days TH decreased its proline to one-third, whereas in N 22 doubled. Although amino acids doubled within 24hrs, gradually they depleted in N 22 . This may be due to conversion of aminoacids into proline which could be the most compatible solute. Sugars increased within 24hrs, but were depleted in 10days in both. In TH, the shoot and root biomass decreased, whereas in N 22 there was a significant increase in root biomass. Shoot and root RWC of N 22 was higher than TH under stress. GR increased in both TH and N 22, APX and SOD increased only in N 22. Proline accumulation, increase of root biomass and antioxidant enzymes such as APX or SOD during water stress are contributing to drought tolerance and could be used in screening for drought tolerance.