The discrimination, Δ, against ¹³C in carbon accumulation by different genotypes of peanut was investigated by looking at changes in composition of isotopes of CO₂ during CO₂ assimilation and at the ¹³C/¹²C ratio in dry matter. The short term (minutes) discrimination, which was measured as CO₂ passed over leaves in a gas exchange cuvette, was positively related to p_i/p_a, the ratio of the pressure of CO₂ inside the leaves to the pressure of CO₂ around the leaves, which is independently related to transpiration efficiency, W. Heritability of Δ was studied in plants grown in pots and in the field. Crosses were made of cultivars with contrasting Δ and W. For these genotypes, small Δ (and large W) seemed to be dominant in the F₁ progeny. Severe drought stress slightly decreased Δ and W in F₂ plants but, for parental genotypes in another experiment, Δ decreased but W increased when they were less severely stressed. A strong negative phenotypic correlation (r = -0.78) was found between W (g DM/ kg water used) and Δ in the leaves of well-watered potted plants of F₂ progeny from a cross between two cultivars with contrasting W and Δ. Transpiration efficiency varied significantly among cultivars of peanut irrespective of whether plants were drought-stressed or well-watered. Transpiration efficiency in the potted F₂ plants had a heritability of 34% while Δ had a heritability of 53%. The broad sense heritability of Δ in fieid-grown cultivars was 81% and there was no significant genotype × environment interaction for Δ. The high heritability of Δ and its strong genetic correlation with W indicates that Δ is a suitable selection criterion for W in peanut breeding programs.