Water relations of two cultivars of groundnut (Arachis hypogaea L.) were studied under soil water deficit stress. Cultivars GG-2 and JL-24 were taken as relatively resistant and sensitive, respectively. Relative water content (RWC), leaf water potential ('Ji leaf), diffusive resistance and transpiration rates of the leaves were measured during and after relief of water stress. The resistant cultivar GG-2 was characterised by low leaf 'lj! at relatively higher RWC than the sensitive cultivar JL-24. Diffusive resistance and transpiration rates were found to be favourable for dry matter production in GG-2. Characters responsible for better growth in the resistant cultivar under water stress are discussed.