Problem statement: Many cultivated area are situated in arid zone, where crop photosynthesis and productivity has limited by drought. Thus any treatment, such as methanol, that improve plant water relation and reduce stress impacts, could be benefit. Approach: In order to investigate effects of methanol application on some physiological properties of soybean under low water stress, a factorial experiment was done at Research Field of Faculty of Agriculture and Natural Resources, Islamic Azad University-Karaj Branch, Karaj, Iran, during 2008, based on a randomized complete block design with three replications. The first factor was different levels of methanol equal to 0 (control), 7, 14, 21, 28 and 35 volumetric percentage (v/v), which were used as foliar applications at three times during growth season of soybean, with 15 days intervals. The second factor was water stress conditions in two levels, based on depletion of 40 and 70% of available soil moisture. Some traits such as Grain Yield, Relative Water Content (RWC), chlorophyll fluorescence parameters and chlorophyll content were measured, one day before and after the third methanol application. Results: Chlorophyll content (Chl), GY, Electrolytes Leakage at second sampling, photochemical capacity of PSII (F v /F m ), maximum and variable fluorescence (F m and F V , respectively) were affected by water stress significantly (p<0.05). As drought severity was increased, mean values of photochemical capacity of PSII, Chl and RWC tend to decline, whereas minimum fluorescence (F 0 ) and Electrolytes Leakage were increased. Methanol foliar application influenced significantly (p<0.05) Chl, RWC, Grain Yield, and all fluorescence parameters. There was a positive, high correlation between GY with maximum fluorescence, photochemical capacity and also Chl and RWC in both samplings. Conclusion: It seems applying methanol on water stressed soybean plants can reduce harmful effects of drought and improve plant potential to cope with stress.