Abiotic stresses present a major challenge in our quest for sustainable food production as these may reduce the potential yields by 70% in crop plants. Of all abiotic stresses, drought is regarded as the most damaging. The complex nature of drought tolerance limits its management through conventional breeding methods. Innovative biotechnological approaches have enhanced our understanding of the processes underlying plant responses to drought at the molecular and whole plant levels. Hundreds of drought stress-induced genes have been identified and some of these have been cloned. Plant genetic engineering and molecular-marker approaches allow development of drought-tolerant germplasm. Transgenic plants carrying genes for abiotic stress tolerance are being developed for water-stress management. Structural genes (key enzymes for osmolyte biosynthesis, such as proline, glycinebetaine, mannitol and trehalose, redox proteins and detoxifying enzymes, stress-induced LEA proteins) and regulatory genes, including dehydration–responsive, element-binding (DREB) factors, Zinc finger proteins, and NAC transcription factor genes, are being used. Using Agrobacterium and particle gun methods, transgenics carrying different genes relating to drought tolerance have been developed in rice, wheat, maize, sugarcane, tobacco, Arabidopsis, groundnut, tomato, and potato. In general, the drought stress-tolerant transgenics are either under pot experiments or under contained field evaluation. Drought-tolerant genetically modified (GM) cotton and maize are under final field evaluations in the United States. Molecular markers are being used to identify drought-related quantitative trait loci (QTL) and their efficient transfer into commercially grown crop varieties of rice, wheat, maize, pearl millet, and barley.