Groundnut plants were grown in pots under natural climatic conditions and were subjected to soil drought at flowering stage for understanding the physiological adaptation of the crop to water stress. Leaf water potential, transpiration rate, stomatal conductance and photosynthesis rate were measured daily in the morning until the young leaf-lets folded (parahelionasty). As the intensity of water stress increased, efficiency of retention of water potential by leaf tissues per unit decrease in transpiration rate and of decrease in transpiration rate per unit decrease in stomatal conductance increased, besides minimisation of water loss by accelerated fall in transpiration rate. The results reveal that groundnut plants tend to adapt to water stress by slowing down tissue dehydration.