Canola (Brassica napus L.) is a major rotation crop but low yield has limited its adoption by farmers in the low-rainfall regions of southern Australia, where drought events can occur at any stage of crop development. We examined the effect of soil water deficit on osmotic adjustment and seed yield of canola and mustard (B. juncea L.) at the juvenile, elongation, anthesis, or seed-fill stage under glasshouse conditions and post-anthesis drought in the field. At the juvenile and elongation stages, leaves of both canola cv. Monty and mustard line 397-23-2-3-3 adjusted osmotically after exposure to water deficit. In comparison, only the mustard line expressed osmotic adjustment at anthesis and neither genotype adjusted at the seed-fill stage. A single drought event at the juvenile or elongation stage had little effect on growth and seed yield of either genotype, whereas water deficit at anthesis or seed-fill stage reduced seed yield of the canola cultivar by decreasing pod number, seeds per pod, and/or harvest index but largely did not affect the mustard line. In the field where rainfall diminished and plants were subjected to increasing water deficit during the reproductive stages, canola cv. Karoo and mustard line JN25 showed higher osmotic adjustment at anthesis and less yield reduction than the canola cv. Monty. This study suggests that yield sensitivity to water deficit was mainly due to its effect on concurrent formation of yield components, but could be modified by the physiological trait of osmotic adjustment.