Searching for crop cultivars that are resilient to environmental stresses is crucial for maintaining global agricultural production. Our study aimed to screen semiarid-adapted cotton cultivars performing well under water-restricted conditions. Trials were conducted in a greenhouse involving six cotton cultivars (FM 911, FM 912, FM 970, FM 974, FM 978, and FM 985) subjected to four water levels (100, 80, 60, and 40% field capacity—FC). At 20 days post-drought imposition, the growth, leaf succulence, osmotic potential, gas exchanges, photosynthetic pigments, and lipid peroxidation were measured. Cotton plants showed reduced growth and gas exchanges at 60% and 40%, displaying elevated sensibility at 40% FC. Under 60% FC, FM 970 and FM 985 exhibited a superior dry biomass, leaf area, and growth, indicating high drought tolerance. FM 911, FM 912, and FM 978 displayed higher rates of net photosynthesis, transpiration, stomatal conductance, and chlorophyll content under 60% and 40% FC, but also demonstrated an increased lipid peroxidation. Additionally, FM 911, FM 970, and FM 974 had the lowest osmotic potential values. Field capacity at 60% and 40% represent moderate and severe drought conditions for cotton. The superior performance of FM 970, FM 978, and FM 985 under drought is attributed to pigment accumulation and photosynthetic efficiency. Our findings suggest that a water-saving strategy with an 80% FC can enhance sustainable production and identify promising cotton cultivars for cultivation in water-scarce regions.