The experiment aimed to investigate the impact of polyethylene glycol (PEG) treatments, specifically 0% (control), 15% (PEG-I), and 20% (PEG-II), on various seed quality traits, proline content, and morpho-physiological traits at both the seed (9 days) and seedling stage (18 days) in five Lathyrus genotypes and to relate the ISSR markers based molecular characterization of these genotypes osmotic stress. The results unveiled substantial phenotypic and molecular diversity among the accessions concerning morpho-physiological and seed quality traits. Ratan variety exhibited promise as it demonstrated a higher germination percentage (G%) at 62.78±2.42% for PEG-I and 13.33±0.10% for PEG-II, along with a lower mean germination time (MGT) of 3.80±0.071 days for PEG-I and 7.33±0.16 days for PEG-II. P-24 showcased the highest seed vigour index-I (SVI-I) at 872.06±27.02 for PEG-I, whereas Nirmal recorded the highest SVI-I at 80.03±8.53 for PEG-II. Notably, Nirmal displayed the lowest proline content, expressed as μmol per gram of fresh weight (52.45±6.27 units for PEG-I and 111.37±4.75 units for PEG-II) at the seed stage. For the seedling stage, Ratan exhibited the lowest proline content, expressed as μmol per gram of fresh weight (14.18±1.09 units for PEG-I and 10.67±0.851 units for PEG-II). Prateek demonstrated higher seedling length (42.00±1.44 cm for PEG-I and 45.88±0.30 cm for PEG-II), as well as root length (14.11±0.84 cm for PEG-I and 21.29±1.59 cm). Principal component analysis (PCA) highlighted that the most influential variables contributing to the highest variability in the PCA included SVI-I, MGT, and seedling length. Molecular characterization employing ISSR markers resulted in three clusters: CI (Ratan), CII (Pusa-24 and Mahateora), and CIII (Prateek and Nirmal), based on the genetic similarity coefficient. These genotypes exhibit the potential to be recommended and utilized in breeding programs for developing drought-tolerant Lathyrus germplasm.