Climate change will have an influence on crop production and lead to a focus on stable and high‐yielding varieties in breeding programs. Winter rye (Secale cereale L.) is an important crop in Central and Eastern Europe, especially in marginal environments where varying weather conditions have a strong impact on grain yield. Because these environments are the first to suffer from abiotic stress, yield stability is an important breeding goal for rye. The objectives were to evaluate phenotypic diversity for genotype by irrigation interaction (GII) and the potential of hybrid rye to combine high yield potential with superior yield stability. Two intrapool and one interpool population with each of 218 to 220 testcross progenies were grown in a total of 16 to 18 environments (location by year combinations). In six of these environments, managed drought stress trials (rainfed vs. irrigated) were conducted. We observed a wide range of grain yield, from 4.9 to 11.5 Mg ha−1. In the managed drought stress experiments yield reduction in the rainfed regime ranged from 2 to 41% with an average of 18%. Only in a few environments did significant GII occur, although in most environments yield reduction was significant. Genotypic correlations of grain yield between irrigated and rainfed regimes were generally high (0.8–1.0). The coefficient of linear regression (bi) was not significantly different from 1 among progenies. Mean square deviation from linear regression (S2di), however, varied significantly (P < 0.01). To ensure broad adaptability of germplasm, managed drought stress environments should be included in test environments, but they need no special selection procedures. In conclusion, modern rye breeding material already combines high yield potential and stability.