Area of crop cultivation can be increased by selecting the suitable genetic resources adapted for the relevant selection pressure. The areas with sandy soil and extremely higher temperature, used for crop cultivation, creates problems of ground water contamination due the extensive and frequent application of Nitrogen (N) fertilizer combined with heavy irrigation. The tolerant chili varieties for the declined N is a potential solution to overcome the aforementioned problems. Thirteen commercial chili varieties were assessed in three NH4NO3 levels (656.25, 437.5, 218.75 mg/L) representing 75, 50 and 25% of the full strength of 875 mg/L, using 60 seedlings per each level in a duplicate experiment. The recorded parameters of number of leaves and roots, length of roots and shoots, dry weight of shoots and roots and chlorophyll content, and their Stress Susceptibility Index (SSI) were analyzed using the statistical tools of ANOVA, Tukey test, PCA, Coefficient Correlation analysis and the Hierarchical Cluster Analysis. The N content in the biomass of selected varieties at different tolerant categories were analyzed. Results revealed that the in vitro technique is a feasible and efficient method for identifying the N-tolerant varieties. Vijaya F1, Lanka Hot, Devnur Deluxe and Kodian Hot were identified as the tolerant varieties and Ragini as a highly susceptible variety. Other varieties fall in between the two extremes. The accuracy of the categorization was confirmed by the N assay with comparable N at each level in tolerant varieties and a significant drop in susceptible varieties where a genotypes-dependent absorption efficiency was demonstrated.