The physiological and morphological responses to water stress induced by polyethylene glycol (PEG) or by withholding water were investigated in Aegilops biuncialis Vis. genotypes differing in the annual rainfall of their habitat (1050, 550 and 225 mm year^–1) and in Triticum aestivum L. wheat genotypes differing in drought tolerance. A decrease in the osmotic pressure of the nutrient solution from –0.027 to –1.8 MPa resulted in significant water loss, a low degree of stomatal closure and a decrease in the intercellular CO₂ concentration (C_i) in Aegilops genotypes originating from dry habitats, while in wheat genotypes high osmotic stress increased stomatal closure, resulting in a low level of water loss and high C_i. Nevertheless, under saturating light at normal atmospheric CO₂ levels, the rate of CO₂ assimilation was higher for the Aegilops accessions, under high osmotic stress, than for the wheat genotypes. Moreover, in the wheat genotypes CO₂ assimilation exhibited less or no O₂ sensitivity. These physiological responses were manifested in changes in the growth rate and biomass production, since Aegilops (Ae550, Ae225) genotypes retained a higher growth rate (especially in the roots), biomass production and yield formation after drought stress than wheat. These results indicate that Aegilops genotypes, originating from a dry habitat have better drought tolerance than wheat, making them good candidates for improving the drought tolerance of wheat through intergeneric crossing.