Background: Wheat, an important cereal crop, is commonly cultivated in arid and semiarid areas, and therefore, it often experiences water deficit conditions. The consequences of induced stress on wheat can be mitigated through vermicompost amendments. To address drought stress on wheat seedlings, a pot experiment was conducted in the wire-house in which two contrasting wheat cultivars, Faisalabad-08 (drought-tolerant) and Galaxy-13 (drought-sensitive), were exposed to three water level conditions: well-watered [D0, 70% of field capacity (FC)], moderate drought (D1, 45% FC), and severe drought (D2, 30% FC). Four rates of vermicompost, derived from cow dung enriched with cellulolytic microbes, were applied (VT0, control; VT1, 4 t ha −1 ; VT2, 6 t ha −1 ; and VT3, 8 t ha −1 ) to the experiment. Data on various physiological, biochemical, and enzymatic antioxidants were recorded. Results: Our results demonstrated that the drought treatments significantly reduced nutrient accumulation, chlorophyll and SPAD values, and carotenoid content in both cultivars where the maximum reduction was recorded for severe drought stress. Nonetheless, the application of vermicompost significantly improved these traits, and statistically maximum chlorophyll contents, SPAD value, and total carotenoid contents were observed for VT1 in both cultivars under drought treatments. While the lowest chlorophyll and carotenoid contents were recorded for untreated replicated pots. Among the cultivars, Faisalabad-08 exhibited greater resistance to drought, as evidenced by higher values of the aforementioned traits compared to Galaxy-13. Soil-applied vermicompost also showed a positive influence on antioxidant enzyme activities in both wheat cultivars grown under well-watered as well as water-scarce conditions. Conclusions: The findings of this study revealed that drought conditions substantially decreased the enzymatic antioxidants and physiological and biochemical attributes of the wheat crop. However, soil-applied vermicompost, particularly at an optimum rate, had a positive impact on the wheat seedlings under drought conditions. Moving forward, exploring the potential of utilizing cellulolytic microbe-enriched cow dung vermicompost stands as a promising avenue to mitigate the detrimental effects of water stress on wheat. Further research in this direction could offer substantial insights into enhancing wheat resilience and productivity under water stress conditions.