Rice (Oryza sativa) falls among the staple food crops in different parts of the globe. In current scenario of climate change, drought stress leads to significant decrease in crop production. It has negative effect on rice growth and development by affecting cellular, physiological and molecular processes. Photo-respiration increases under drought stress leads to overproduction of reactive oxygen species (ROS) in different organelles of the cell like chloroplasts, mitochondria and peroxisomes etc., which induce severe oxidative stress in rice. Over production of ROS can cause damage to proteins, lipids and DNA leading to lipid peroxidation, proteins oxidation, mutation, DNA damage that can lead to cell death. Under drought stress, ROS turn over in various organelles overload antioxidant quenching mechanism leading to oxidative damage. Oxidative stress can be overcome by the scavenging system, which consists of enzymatic and non-enzymatic antioxidants. Moreover, ROS also acts as signaling molecule and triggers defense mechanism through specific signal transduction network under stress. Under stress condition, activation of molecular cascades is initiated through the perception of stress that leads to the activation of signal transduction pathway including expression of transcription factors and stress related genes. Understanding of this regulatory mechanism of plant development and growth in drought-ROS stress can be promising in the development of improved transgenic rice under this stress. This review will provide an overview of ROS synthesis and signaling pathway under drought condition in rice.