Climate change, food shortage, water scarcity, and population growth are some of the threatening challenges being faced in today’s world. Drought stress (DS) poses a constant challenge for agricultural crops and has been considered a severe constraint for global agricultural productivity; its intensity and severity are predicted to increase in the near future. Legumes demonstrate high sensitivity to DS, especially at vegetative and reproductive stages. They are mostly grown in the dry areas and are moderately drought tolerant, but severe DS leads to remarkable production losses. The most prominent effects of DS are reduced germination, stunted growth, serious damage to the photosynthetic apparatus, decrease in net photosynthesis, and a reduction in nutrient uptake. To curb the catastrophic effect of DS in legumes, it is imperative to understand its effects, mechanisms, and the agronomic and genetic basis of drought for sustainable management. This review highlights the impact of DS on legumes, mechanisms, and proposes appropriate management approaches to alleviate the severity of water stress. In our discussion, we outline the influence of water stress on physiological aspects (such as germination, photosynthesis, water and nutrient uptake), growth parameters and yield. Additionally, mechanisms, various management strategies, for instance, agronomic practices (planting time and geometry, nutrient management), plant growth-promoting Rhizobacteria and arbuscular mycorrhizal fungal inoculation, quantitative trait loci (QTLs), functional genomics and advanced strategies (CRISPR-Cas9) are also critically discussed. We propose that the integration of several approaches such as agronomic and biotechnological strategies as well as advanced genome editing tools is needed to develop drought-tolerant legume cultivars.