Drought stress is one of the major constraints in groundnut producing areas of Sub-Sahara Africa as its yield is reduced by 56-85%. Mitigating this constraint requires the selection of resilient genotypes that withstand drought threats to groundnut production. The objectives of this study were to identify drought tolerant genotypes to be used for groundnut breeding program, to assess the mode of gene action controlling drought tolerance in groundnut and to determine the association of pod yield with morphological and physiological traits related to drought tolerance in groundnut. One hundred and seven (107) groundnut genotypes were screened for drought tolerance during 2018 dry season in a split-plot design arranged in a randomized complete block design under non-stress and water-stress conditions. The mean squares for the morphological and physiological traits showed a highly significant (P≤0.01) difference between the genotypes under water-stress and combined analysis. Based on the PCA ranking under water-stress condition, genotypes ICGV-IS-13115, RS006F4B1-45, ICGV-IS-07853, ICGV-IS-13989 and RS006F4B-534 were the top 5 drought tolerant while genotypes ICGV-IS-07828, 12CS-010, ICGV-IS-07809, RS006F4B1-45(B) and ICGV-IS-07904 were the least 5 drought susceptible. Seven groundnut genotypes comprising of four drought susceptible and three drought tolerant were randomly selected from the results of screening experiment. The seven genotypes were crossed in a half diallel mating design to obtain 21 F1 progenies. The parents, 21 F1 progenies and two checks were evaluated in a randomized complete block design with two replications under both conditions. Data were collected on days to 50% flowering, plant height, pod yield, 100-seed weight SCMR at 40, 60 and 80 days after sowing (DAS) and harvest index (HI). The analysis of variance showed a highly significant (P≤0.01) difference among the genotypes for viii plant height, number of pods per plant, pod yield and SCMR at 60 DAS under both conditions while a significant (P≤0.05) difference for seed weight under water-stress condition, 100-seed weight and HI under non-stress and water-stress condition was observed. Broad-sense heritability was high (67.45%) for plant height, moderate (46.23%) for 100 seed weight and (42.54%) for SCMR at 60 DAS under water-stress condition. General Combining Ability (GCA) effect for all the traits were significant (P≤0.05) in both non-stress and water-stress conditions, while Specific Combining Ability (SCA) effects were significant (P≤0.05) for all the traits in both non-stress and water-stress conditions. Highly significant GCA effects for all the traits were observed for ICG 5195 (P6) under water-stress condition, while ICGV-IS-07841 (P3) was a poor general combiner under the same condition. Highly significant positive SCA effects for number of pods per plant, seed weight and pod yield were observed with P1 x P6 and P3 x P6 crosses under water-stress condition. SCMR at 60 DAS had a moderate positive and significant ( r =0.45, P≤0.01) relationship with pod yield; HI recorded a strong positive and highly significant ( r =0.59, P≤0.01 and r =0.83 P≤0.01) relationship with number of pods per plant and pod yield. Although both additive and non-additive gene actions were involved in the expression of most traits, non-additive was more important than additive gene action under water-stress condition. The importance of non-additive effect under water-stress suggests the need to achieve acceptable progeny performance under drought stress condition. Therefore, cross P1 x P6 and P3 x P6 exhibit highest SCA effects for number of pods per plant, seed weight and pod yield which can be improved through pedigree selection. SCMR at 60 DAS and HI could also be used as an indirect selection for pod yield under drought stress condition.